The above video, shows how to build a toy switchblade knife from two Popsicle sticks and a couple of rubber bands.
It's one of the many creations of Arvind Gupta, an educator who tours rural villages in India and constructs toys from simple objects to amuse children as he teaches them science. He creates an astonishing variety of toys from simple materials. At his website Toys From Trash you can view photographs and literally dozens upon dozens of short YouTube videos like the one above which show his projects.
As for the wooden switchblade, short of poking one's self in the eye with the thing, it is of course harmless. However, while boys would love it, you can imagine that American helicopter moms and educators would faint at the mere sight of it. The degree to which the phrase "boys will be boys" has turned into a pejorative in American education and certain cultural circles is a real shame.
At any rate, I suggest you go to the Toys From Trash site and spend some time watching the videos. If you have kids you'll probably find something silly and marvelous you can build together -- just be sure not to get caught by a nanny-stater while you're having fun.