From Valve Developer Community
The Valve Hammer Editor (more informally known as Hammer) was the official mapping tool for the Goldsource engine - the engine that ran Half-Life and Counter-Strike and other pre-Source Valve games. The latest version is included in the Source SDK, and is for mapping under the Source engine (which all newer Valve games run under). In this page, the history of the mapping tool is documented.
Originally developed with the name The Forge and distributed under the name Worldcraft on the retail Half-Life CD, Valve Hammer Editor 3.x is the official Goldsource mapping tool.
Valve Hammer Editor 4.x, provided as a component of the Source SDK, is the official Source mapping tool. Apart from the construction of level architecture, Valve Hammer Editor 4.x is also heavily involved with creating level events and scripting.