The damage appears to be mostly cosmetic in nature. Of course, the way damage is defined, it leaves a lot of room for interpretation. All passports issued by the US now have a chip embedded. Most countries either use the chip or scan the 'bar code' at the bottom of the picture page. I suspect that the OP has been able to travel since neither of those have been damaged, thus the computers have been able to accurately read / scan the passport when entering / exiting. I suspect that had either of those parts been damaged, the OP would not have been able to travel, but since the passport can still be read electronically, they were permitted.