"Hell-forged hands" imply that Satan, depicted here as a blacksmith, made Grendel to be an evil force bent on destroying humans. In the poem, Grendel's hands have an impossibly strong grip and are inhumanly claw-like. These superhuman hands will force Beowulf, who represents the good, to rely on God to help him in the struggle against this Satanic creature.
Grendel's powerful hands are a synecdoche for his demonic evil. The next line, which mentions that his "misery leaped" from his hands, suggests that this hell-spawned creature is also driven, at least in part, by deep unhappiness. He wants to eat the men of the mead hall, and for a long time he is able to eat his fill, but the implication is that he is also driven, as the devil's spawn, to spread his own innate misery to humankind. His hellish hands are part of a creature whose intent...
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is not just to survive but to be malicious.
Grendel is described as a creature of nature, but that nature is always depicted in the poem as threatening and monstrous, the chaos that exists outside of the mead hall. This is not the benign nature of pretty flowers and tweeting birds infused with the divine spirit later described by Romantic poets. Grendel is a manifestation of nature's evil, its destructive potential. In attacking the mead hall with his "hell-forged hands," he is threatening to rip apart civilization itself, the very force that keeps evil at bay.
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
Men's ears.
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.
Recent treatments of Grendel, from John Gardner's novel (of which the monster is the eponymous protagonist) to Robert Zemeckis's 2007 film, Beowulf, have tended to portray the monster in a rather sympathetic light as a lonely outcast who attacks mead-halls as an expression of frustration. This sympathy is entirely absent from the Old English poem, which consistently portrays Grendel as a terrifying force of nature long before nature was romanticized by Wordsworth and Coleridge.
In Beowulf, the world outside the mead-hall, Heorot, is cold, dark, and terrifying. Grendel brings that terror into the bright, cheerful abode of humanity. He is not a misunderstood outsider: he is a representative of everything diabolical and demonic which humanity must withstand and destroy if it is to continue to exist. All the works of "hell-forged hands" are necessarily evil, bringing chaos and destruction to the small enclave of light that it has taken humanity so long to create. This is what the kenning conveys.
The use of this kenning is part of a range of similar descriptors applied to Grendel, all trying to convey the same thing. He is variously described as a "fiend," as a descendant of Cain—who betrayed and killed his brother and was then sent away into exile, in the book of Genesis in the Bible—and as having come from hell. This description, then, is another implication along the same lines. Grendel is a monstrosity, a fiend, and something that was, as far as Hrothgar's men are concerned, forged in hell. Although he is not literally a demon, what he does to the men, tearing them apart and wrecking their hall, seems the work of the devil. Moreover, he has absolutely no regard for social norms. He does not recognize the strict boundaries of honor and respect for context which were placed on this society; this is part of why he is represented as a descendant of Cain, someone else who was exiled for his flagrant flouting of the rules of society. Grendel is hellish because he exists on the fringes of society and then attacks it for his own ends.