I've never heard it before, but I assume that it means that an axe can be used for two things: for good - to bring firewood for warmth, protection, and cooking; or for evil - to attack another man who holds an axe and cause strife and warfare. The saying comments on which option is the correct one.
New words, one handy idiom, and a 2-minute quiz — delivered to your inbox to keep your streak alive.