****GROSS EXPLANATION AHEAD*****
I heard about this a long time ago, and I don't know if this is confirmed or not, but I was told that the notch in the old tags was this - Post battle, when forces were collecting bodies, they would take one disc for records, and the other tag would be place in the dead's mouth, with the notch between the two front teeth - then one would kick the jaw closed, lodging the tag in the dead's mouth. That way, the tag would not be lost, and would later be matched with the tag collected for records.
A quick google search yielded similar, but not so vulgar stories http://www.google.ca/search?hl=en&q=notch+in+dog+tags&meta=