The Queen's Sword is an extremely powerful weapon that is only obtained by slaying all sixteen colossi in Hard Time Attack. While the weapon itself does not provide any advantage to the player in the way of tracking down a colossus, the Queen's Sword can eliminate most of a colossus's weak points in one to two hits each. Even colossi like Malus can be defeated in two fully charged stabs.
Dormin says the following upon retrieving the item:
Ahh... That is the "Queen's Sword"...
It can inflict a mortal blow with one strike to the vitals.
The sword's hilt shares similar design to the hilt of the Queen's Sword found in Ico (minus the chain that is seen on the sword's hilt). The blade itself doesn't resemble any weapon from Ico, but merely shines brightly as if almost made purely of light energy. If you look closely at the blade, you may notice a dark aura surrounding the sword, possibly a hint of the Queen's dark magic, hence the name.