If you want the level 3 hammer in Grounded, it's actually quite a bit easier than getting the level 2 one because you really just need to smash through something you couldn't previously! This thing is extremely powerful and has the highest stun and damage rates in the game right now. So, if you want to clobber yourself some insects, you'll want to invest some time into getting one of these.
To make the tier 3 hammer, you will need to first get the tier 2 hammer. You will need to brave some pretty difficult parts of the map to obtain it, but once you have it you can proceed with upgrading to the Mint Mallet. Now, we just need to get Mint Chunks, Spider Silk, and Flower Petal to craft the new hammer.
To get the Mint Chunks, we will head to the nearby Ice Caps Mint Container. It is just northeast of the first Field Station and northwest of the Mysterious Machine. You will likely have run into it already. Once you've gotten there, you will need to smack the dispenser top to open it up and expose the mints.
Once you've got that open, you can now start to hack away at the mints. These take a long time to break off, so you will just need to hit it over and over again until you get enough chunks. You need 5 in total, so you are going to be here for a while.
We now need Spider Silk, which you are likely familiar with if you've already created the tier 2 axe. You can find Spider Webs that can be harvested all over the map, you can slay Spiderlings which are pretty easy to kill, and you can also just duel with the massive spiders which is probably the most time consuming option. There's a cave over near the big rake which is on the southwestern part of the map that has quite a few webs to harvest, I would go with that option if you want the silk.
Finally, we need 8 Flower Petals, and thankfully these are relatively easy to get. If you head north on the map, you will eventually run into a river of sorts. Along the banks of this water are flowers that spawn and periodically drop petals. The flowers come in a variety of colors: yellow, purple, and red. It doesn't matter which you get, they all count towards the same item pool.
You can either run up and down the banks to collect the petals, or you can fire some arrows up at the bulb and knock some down. It shouldn't take too long, just be on the look out for spiders!
Once you've collected all of your resources, just head back to your Workbench and craft your brand new mallet!