I guess you could use it for a Texas Toothpick, or a Bowie, or any knife really. The integral flap idea is an old form which creates the loop for the belt without having to add leather, which of course saved the maker extra work as he didn't have to stitch anything extra to add a functional loop. I'm not 100% sure but I believe the design is either Mexican or early 1800's Texan.
Since belts have been used for thousands of years, it's always been an excellent place to hold weapons and sheaths of that period were usually worn on a belt or tucked inside the garment much like today's "inside the waist band" holsters are today. The leather piece with the concho is laced together at the back and each long lace ends going through their own hole on the skirt which locks the loop to the sheath. If this type of sheath was going to be used like an inside the waist holster then the leather thong/lace would just be left out and the flap simply tucked inside the pants.
The other way to add that place for the concho was to eliminate the thong idea, and cut the slots in the flap to form the loops, turning it into a "Mexican Loop" sheath as pictured here in the four samples of the "Mexican Loop" design..
I'm surprised you haven't come across this design before. Thanks for asking serb.