10How to craft it
Work Benchthe worst tool in the game
Not the worst in its class, the worst overall. It swings slowly, hits for almost nothing, and its reach is shorter than a normal swing, so you have to stand closer to whatever you are knocking down than any other tool asks of you. As a weapon it loses to the Copper Shortsword, which is itself the running joke of early Terraria. The one thing it beats the shortsword at is knockback, which is not a plan.
how long to keep it
About five minutes. It exists so a fresh character can clear background walls and slope a few blocks before finding any ore, and the moment your first bars come out of the furnace you should stop touching it. Reforging one is money set on fire. The only real reasons to hold on to a Wooden Hammer are a self-imposed challenge run or a display case in your base.