The oil will over time, have congealed on the blade until it becomes a semi solid coating. Up close, it looks like a thin coating of dried linseed oil. Despite being 8000 grit it does have abrasive qualities and should be used only when necessary. It tends to retexture the surface and reopens the pores of the steel so oiling should be performed more frequently for a time thereafter. Lighter smaller particles remain in suspension while the heavier particles drop out.
Separation is achieved by simple decantation.
Alternately it is available commercially in the applicators seen in Fig 5. In emergencies pure talcum powder without any additives can be substituted. Most swords in the west today were taken as trophys during WW2 . As they were taken in war time most are fitted with their regular combat scabard. Sword blades should never be stored in their regular scabard as the buildup of dirt and grit over the years is inevitable.