A shaved knuckle was a way of cheating in a game of knuckles, where you shaved a corner of a knuckle to change the outcome.
The expression was frequently used by Fiddler, Kalam Mekhar and Quick Ben. "The hole" was a reference to Quick Ben's Warren, which could put him at Kalam's side in a number of seconds. The Shaved Knuckle in the Hole was a way of cheating whoever was endangering Kalam, by introducing Quick Ben to the scene.
Fiddler and Kalam travelled to Seven Cities to find a way to Unta, the Malazan imperial capital, without attracting attention. Quick Ben remained on Genabackis, but could join them at a moment's notice as their shaved knuckle.