This is a great question, and really interesting! To expand a bit on what Maulik V says (which I agree with), I think this could have a few different meanings, depending on context/emphasis:
- something in between the negative and positive;
- something more complicated than either the negative or positive; or
- a disagreement with something which has been said.
What all three of these cases have in common is that they all follow on from (or respond to) an idea or statement that the thing is (or is not) made by hand. To try and make this clear, I'll give some examples.
1, 2: 'Made by hand' might imply that something is 100% made by hand, with no help from machines (a very narrow category). Or, it could mean anything which is made with some use of hands - e.g. someone uses their hands to make some of it, or to operate a machine to make it (a broader category).
When two people talk about this, they may use double negation to show that there is ambiguity, a difference in definitions, or that it is not as simple as 'yes'/'no'. In both of these cases, the second not would be verbally stressed.
Imagine Bob is admiring Alice's shirt (which is fabulous)...
Bob: I like your shirt, Alice - it's fabulous!
Alice: Thanks! I made it myself.
Bob: Oh wow! A hand-made shirt...
Alice: Thanks, although I used a sewing machine, so it's not really made by hand...
Bob: Well, it's not *not* made by hand, either...!
Bob would likely stress the second 'not' very clearly, and the interpretation would be either:
- "I agree that it's [not] [100% made by hand]. But it's [not] [0% made by hand], either" (in between the negative and positive); or
- "I agree that it's [not] [100% made by hand]. But just because it's [not] [100% made by hand], that doesn't mean that it's [0% made by hand]" (more complicated than yes/no).
It could easily be a mixture of the two. Another example of where 1 or 2 might apply:
A: Don't put cream in my coffee - I'm allergic to milk!
B: But it's not milk; it's cream!
A: Yes, but it's not not milk; I can't have it!
3: The matter could also be a simple disagreement with what someone said, putting 'not' in front of a quote of their statement ("not made by hand"):
A: Check out my badge! I made it by hand.
B: That's not made by hand!
A: It's not "not made by hand"! Don't be so rude; I made it myself.
B: Oh, sorry - I just meant it looks professional. Do you sell them?
Here, there is no significant stress on the second not - maybe a light stress on 'not' and/or 'not made by hand'.