The Anglo-Saxon poem Beowulf is one of the oldest works of literature still in existence, and it tells of the heroic deeds of a man named Beowulf who fights against three non-human foes. The first of these is Grendel.
Grendel is a great monster who "nursed a hard grudge" against Hrothgar and Hrothgar's mead-hall, Heorot. He is a night marauder, killing at will, and no one is able to stop him. A few lines before the quote you mention we read this:
Till the monster stirred, that demon, that fiend
Grendel who haunted the moors, the wild
Marshes, and made his home in a hell.
Not hell but hell on earth. He was spawned in that slime
Of Cain, murderous creatures banished
By God, punished forever for the crime
Of Abel's death.
The clear implication of this description is that Grendel is somehow from the devil, just like the other fiends and demons. WHen the poet says Grendel made his home in hell, he is of course suggesting that Grendel is connected to Satan. This is intensified by the reference to Cain being banished by God.
The full quote which contains the description from your question is this:
Twelve winters of grief for Hrothgar, king
Of the Danes, sorrow heaped at his door
By hell-forged hands, His misery leaped
The seas, was told and sung in all
This description of Grendel is fitting for the evil he does. "Hell-forged hands" imply that the creature to who the hands belong (Grendel) was shaped (formed, birthed) in hell by the devil. It is one of many descriptors we are given that implies that Grendel is pure evil.