Damascus steel is just the principle of folding the metal multiple time to make a pattern.
You can make damascus steel with low carbon metal as well as high carbon metal.
From what I understand, the steel folding principle was used because they had not the technology back in the day to melt the iron/steel hot enough. So the result had a lot of impurity and so the process of folding would remove the impurity from the steel.
Here is a nice video explaining it.
[video=youtube;LLqZdfcVoV8]https://www.youtube.com/watch?v=LLqZdfcVoV8[/video]