Thanks, all.

The side of the instrument ( plywood) is what is delaminating. The inside layer is fine- and it does not sound bad...

I would guess it was stored on that side in a wet environment. Probably not worth the cost of getting it fixed, but if I can make it a playable instrument ( concern about durability with the thin layer left) it is worth some effort.

Definitely NOT a flaw in the instrument- I was surprised at how well made it is.

With the tools I have, I think I can reglue the side by

1. Putting in some glue with a long artists brush
2. Placing the instrument on the good side, and putting weights/sandbags on the glued side, to push the layer into the body
3. Touch up the binding where it is loose
4. See if I can refinish the side enough to be able to get rid of it.

Another "Too nice to trash but not good enough to need to keep it" instrument- I have more than enough guitars, at least until a D-35 Martin comes along