I suppose it could be representing stitching during the manufacturing process.
While not impossible, its pretty rare that visual elements resulting from the construction method are included in drawings of a flag unless they represent unique qualities of a given flag. For example, a one-off, home made battle flag might use multiple shades because they used whatever scraps of clothes were available or stars that are stitched on unevenly because it made in haste. If on the other hand a flag is meant (in story) to be reproduced in large quantities but different makers, you would assume that its only the pattern you would show.
For that reason, I suspect that the designer of the nordic palestinian flag had some sort of design or symbolic-related reason to have that outline even if only "it looked better that way".