Everyone is close on this one.
1. This coin is showing damage on the motto area, thus reducing the rim area.
2. All the cents that year, even proofs had the same issue that year. The devices touching the rims.
3. The Same master hub was used for many years. It was altered a different times to alter the die to fix issues with the die. Sometimes to strengthen the design different events of engraving was enhanced on the die. Some issues of this altering could be see for year. (IE: The 'W' on WE was seen for many years as an earlier alteration. Other events happened to the master die to extend the life of this master die. The channels added around the bust during the 1940's. In the 1960's the enhancing of the throat was noticed. But on the 1968 cents, the issue was used one last year, but on the 1969 cents they new design was used.

Note the size of the devices and the locations of the devices on these two years. So what was happening was a swelling outwards on the master hub. This was used each year to make the master dies.

Note on the chart above, the design mentions to Master dies were created? That master hub was used for many years on cents. Possibly as far back as 1909? But with 1969 cents, there was new master hub created. Then in 1982 there was another master hub created. With more master dies being created, they must have been using a lot more master hub usage on these years. But the first one took many more years that they altered and fixed issues with the original master hub. Seems like the 1983 forward the cent dies the master obverse hubs were created more often with the dates in place. Post 1990 dies had the mintmarks in place. (Thus master hubs were needed to be made for each location) So when The on site die creation happened? Not sure. (My guess would be in the 1996 area. Nothing conformed though that I've read) Change overs maybe done over years, and may not all happen at the same time.
CoopHome:
Why do master die swell outwards? die show wear as they age. so do master hubs, as they were used to be used for many years. master dies were created yearly. because of needs for today's dies, they are created differently.