Leather trace punches are metal tools with a cutting edge used to punch tapered holes into leather. If you imagine an oblong cut, with one side wider than the other, that is what a trace punch creates. They are generally made of steel with highly-sharpened blades.
Trace punches are most popular for harness work, though can be useful for a variety of cutting/punching needs based on their unique shape. Multiple sizes are available for use based on preference and what might work best for your project.