I think the word 切れる, which is the intransitive version of 切る, has a misleading example, which is “この小刀はよく切れる。(This knife cuts well.)”
As I know, 切れる has two different meanings. The first one is the intransitive 切る (to be cut, to cut oneself etc.) and the second one is the potential form of 切る(to be able to cut/to be able to be cut).
As I understand, the word 切れる in WaniKani is used for the first (intransitive) one, but in the example I mentioned it is the potential form of 切る (like “This knife can cut well.”).
I am just a beginner in Japanese, so I may be wrong. Therefore, I am sorry if it is a false alarm. Also, if it is a false alarm, I would be very glad if you could explain why it is.
So, yes, it’s identical in form to the potential of 切る, but it’s under the same entry as 切れる the intransitive verb.
If you want a grammatical reason for why it’s not the potential form, generally speaking the potential form of verbs is not used like this with inanimate objects.
Rephrasing this as この小刀はよく切ることができる, which is the same as the potential form in meaning, is unnatural (confirmed with a native speaker). If 切れる was the potential form, then the 切ることができる version would also be okay.
For instance, if you’re talking about a couch and if it can fit in a room or not, you wouldn’t use the potential form. If you’re talking about a person and whether they can enter a room or not, you could use the potential form. I think the potential form with an inanimate object is understandable, but unnatural.
If you wanted to say that a person could cut something well, then 切れる would be the potential form.