This type of dance was not something that I had heard of in any of my family weddings and my guess is it is more of a recent tradition in line with DJ's and wedding singers who want to give the crowd more 'show'. My search returned a great youtube video of this Persian wedding dance which I thought explained in great detail the meaning behind it.

Like other traditions in Persian weddings, such as Sofreh Aghd, the bride saying 'No' three times and the relatives showering the couple with money, this tradition has to do with showing off, money and 'eshveh'.

The purpose of the Persian Knife dance (Raghseh Chagoo) is for the couple to retrieve a knife from the dancers so they can cut the wedding cake.  The dance starts with one person dancing a typical Persian dance, with the knife and basically asking the couple for money. Once the dancer gets the money, the knife is passed on to the next dancer. The bride and groom continue to offer money to try and get the cake knife. A little back and forth, and a few dance moves later, the couple finally are given the knife and are able to cut the cake. 

It would be advisable to get dancers who are skilled with the knife (ouch!) and know how to keep the crowds interested. Suffice it to say that you need to be careful while performing this little number but in all it is meant in good fun and should be enjoyed!