[4 Scale]

Your pistol exhibits what is typically referred to as high-point holster wear, i.e. wear around the muzzle, trigger plate "island" and some other areas, normal for military Mauser Lugers of this time period. Such wear is consistent with your grandfather's story of the pistol's history, and tends to corroborate the story in that it is evidence the pistol has not been refinished.

Sometime in 1937 Mauser switched to salt bluing and stopped strawing parts; 1937 pistols that preceded this change like yours are sometimes referred to as "1937 first variation" in a nod to this finishing change and are, all other things being equal, slightly more valuable than the later all-blued pistols. Further comments on proof marks, magazines would require clearer photos including photos of the magazine bottoms. Quality, type, numbering of magazines is an important part of assessing any Luger.

 

[4 Scale]

Strawing refers to heat treating of parts and results in the "straw" color. The ejector spring, trigger, take-down latch, mag release and safety lever were strawed until the mid-1937 change. Lugers were also rust blued prior to the 1937 finishing change. Rust blue is more time consuming, requiring repeated treatments but in the opinion of many if not most Luger collectors rust bluing is a more aesthetically pleasing finish than the faster but darker salt blueing used after the '37 finishing change.

In terms of learning about your pistol, search this forum for threads on similar pistols or buy basic books like "Luger Tips" "Lugers at Random" or "Standard Catalogue of Luger". The later work has some inaccuracies but is inexpensive, available and IMO useful to those new to the pistol.