Razor Seeds are one of three Mystical Seeds found in the game, along with Armor Seeds and Pegasus Seeds. Razor seeds can be found by cutting Grass. Getting a Razor Seed will upgrade Link's sword power. If Link finds a second Razor Seed, they will stack, and he'll upgrade his sword power again. The effect persists until the end of the stage.
Game Manual Description
These powerful seeds increase your attack powers when you collect them.