This is the first strike as the sword is drawn from the saya (鞘). This is the very essence of Iaido.
This should be the one and only determinant blow to your opponent, one that is enough to incapacitate him definitively. With practice, a master swordsman can respond to an oncoming attack with speed and accuracy and defeat the attacker. In order to perfect this, one must understand the crucial points of the movement. It is said to have three parts. First being a slow and gradual movement. This is to access the oncoming threat. Second part, the motion speeds up in response to the continued threat. Finally, a rapid and precise move to draw and strike down the attacker. This rhythmic combination is known as "序破急"(Jo-Ha-Kyuu). While this comes with practice, there is an "invisible" component that many have neglected, the sense of "pushing forward". Although the body may not actually move forward greatly, but the opponent must feel a push projecting from your presence. In many other martial arts, this is achieved with the assistance of a shout known as Ki-ai (気合) . Certain schools of Iaido also advocate the use of Ki-ai. However, it is unnecessary.
I have once heard someone said, at the receiving end of a sword blow, the ancient masters can utilise their Ki-ai to halt the speeding sword. Myth or not, the epitome of Iaido is that the attacker will cease his attack by your mere presence. That is what it's meant by the fight is won with the sword still in the sheath. (居合の勝負は鞘の中です) This begins with practicing Nukitsuke, emanate the force of presence, pushing forward.