The hunting knife is a tool used to obtain Raw Meat from dead animals. To use it, look at the corpse of an animal, and choose the "Gut Animal" option from the mouse wheel menu. The corpse will then contain Raw Meat that can be looted like any other corpse or loot pile.
To create Cooked Meat, Raw Meat must be cooked at a Fireplace or a lit oil barrel. Once cooked, Cooked Meat provides 800 blood when eaten, making it the best source of blood when blood bags aren't available.