The Smithy can be accessed from the Camp menu. Here, you can modify or sell weaponry.
Here, the attributes from one weapon can be transferred onto another. The recipient is chosen first, and must have an available empty slot for the new attribute. The recipient's slot is chosen, and then the donor and its attribute is chosen. The donor weapon is destroyed in the process.
Special weapons such as Chrom's Falchion cannot be sacrificed to upgrade other weapons, but they can receive attributes from regular weapons. Attributes with a thick white border cannot be transferred, nor can hidden attributes that have yet to be unlocked. Attributes cannot be transferred between different weapon types, such as Lances and Swords, but they can be transferred between different ranks, such as a Silver Sword and a Bronze Sword.
Weapons cannot have the same attributes twice. Additonally, each Attribute belongs to a specific category, and only a certain amount of each category can be applied to a single weapon at a time.
A list of all attributes, the cost of transferring them, and the category they fit in can be found here.
Attributes can be removed from a weapon. The cost is always 50,000 G.
Attributes with a thick white border cannot be removed, nor can hidden attributes that have yet to be unlocked.
Hidden attributes can be checked here. The attribute hidden behind a KO requirement will be temporarily revealed, allowing you to decide whether to keep the weapon or not. The cost is ten times the amount of KOs still required.
Only 100 of each weapon type can be held at one time, so removing clutter is necessary. Weapons can be sold to receive gold, with a price based on the weapon's rank, quality, slots, and attributes. Special weapons such as Chrom's Falchion cannot be sold, nor can weapons the player has locked with the R button (to prevent accidental destruction or selling).