The hammer is a tool that you use in Valheim to build structures and crafting buildings. Without this item you cannot do anything in Valheim other than run around and punch things, or use primative hand-crafted weapons.
The hammer can be crafted from the player inventory. To use the hammer, put it in the hotbar in your inventory then press the appropriate number to equip it. After the hammer is equipped press right click (default key) to open the building menu. You'll need materials to build, and in most cases you'll need a workbench nearby in order to place any buildings.
Crafting the Hammer requires the following crafting materials:
- 3 Wood
- 2 Stone
The hammer is the most vital tool in the game. You literally cannot progress through the game without it.