Ron Guth: The 1937-D 3 Legs variety resulted from over-zealous polishing of a worn reverse die. The front foreleg was almost completely removed and the back leg developed a "moth-eaten" appearance (see image above). A diagnostic feature of this variety is the "stream" that appears beneath the bison's belly. If this feature is not present, beware of an altered coin.
David Hall: The 1937-D "three-legged" Buffalo nickel is one of the most famous and most important coins of the 20th century. It is arguably the classic Buffalo nickel. This is an excessively polished die variety with the front leg of the Buffalo missing, though interestingly, the hoof shows. The coin is scare in circulated condition and rare, though not that rare, in mint state condition. Some Gem examples have survived. The popularity of this "super cool" variety drives its price as much as its rarity. This statement may seem contradictory, but most 3 leggers are fairly well struck...the leg is just missing! Luster on mint state examples is usually good and, like other 1937-D Buffalos, the luster is usually frosty. Buyers need to be very careful of 'sliders,' lightly circulated coins that attempt to pass as mint state. These coins were pulled out of circulation in 1937/38 as collectors of the era searched their change for this widely publicized variety and these barely circulated examples correctly grade AU50 to AU58+. This of course is not a problem if you buy PCGS graded 3 leggers. This is really a fun coin!