The prosthetic hand of von Berlichingen was advanced for its time, and copied many times for hundreds of years. The most famous hand of his (of which he had three) was devised by a gunsmith, not a blacksmith. Gunsmiths at the time were already designing the wheel-lock firearms that would come to dominate battle fields, so it was not so inconceivable for one to come up with a clever design. All that said, it caused a minor stir and was seen as remarkable.

Despite it's advances, the hand could not perform active movements. The fingers had to be positioned as desired and then locked into place with internal gears and inserted pins. As such, he literally had a grip of iron when needed.

I find claims that he would actually fight with that hand to be dubious due to the mechanics involved in having a prosthetic attached in that way. It could cause intense pain and have a large chance of injury to the surviving stump. Keeping it attached securely during striking would be another issue. I have no doubt he would hold a sword or lance for show, and being slapped or punched by it would be a painful experience.