That area has thrown me fits in the past too trying to photograph, sometimes it can be clean as can be and straight on shots will look marked up there. This one looks like a real winner, where did you find it at?
Are you sending it to be graded??? If so... which service??? It appears to be MS66, or better. Worthy of grading for sure. PCGS???
Yup. Going to PCGS in the very near future. Contrary to popular belief, not all coins worthy of being slabbed have been slabbed.
66 The 1881-S is notorious for great strikes and fresh dies. 67 is gonna be difficult to get on one of these
also contrary to this belief is the fact that every coin that looks like it should be slabbed can be...
I have found that most 1881-S Morgan's grade high. Looking at your photo I would say MS 65 but I am a conservative guy.
It's a common year and the S-mint Morgans are known for an excellent strike. So the TPGs are stricter when grading those. I'd say 65+ or 66 max.