The Hammer of Sundering was a powerful artifact introduced by Avery T'léas in Episode 110. According to her, the Hammer would instantly destroy anything it was struck against, with the side effect of destroying whoever swings it, both in soul and in body. She gave it to the then un-named Ätlän-tã Fælcons to destroy the Demon Portal that was fueling the Demon Apocalypse, and there was much discussion that followed as to who would be the one to swing the hammer.
In Episode 126 Zird the Arcane sacrificed himself using the hammer on the Twis'tar to essentially sunder the edition, bringing the world into the Fifth Edition of Magic.
Leading into The Battle Above the Abyss, they decided that it would be Aludra Wyrmsbane who would sacrifice herself to the Hammer, much to the chagrin of Jaela (the two had begun a relationship by this point). However, before the final confrontation with Fennekin, Jaela and Lord Titus Harper had a secret conversation, during which they both vowed to do whatever it took to keep Aludra from swinging the hammer. They entered Fennekin's chambers and Harper immediately offered the Hammer to him, in exchange for the party's lives. Fennekin saw through the lie, that the Hammer was a fake. This started the fight. During this fight, Aludra found herself with the Hammer, face to face with the Demon Portal. Ultimately, she couldn't bring herself to do it. She returned to Jaela, whereupon they realized that Aludra didn't even have the Hammer anyway.
Later on during the next phase of the fight, Fennekin became a giant incarnation of Orcus himself! He held the Demon Portal in his hand, and it was Thom Vidalis who was revealed to have had the Hammer. It is unknown if he meant to do what he did next, or if it was just a freak accident. He threw the Hammer, and along its arc, it struck the foot of the giant foe. A crack shot up from the point of impact, reaching the Demon Portal and destroying it, Fennekin, the Demon Apocalypse as a whole, and Thom himself...
It is also unknown what became of the Hammer following Thom's sacrifice. It is presumably destroyed, although it survived Zird's using it to destroy the Twis'tar, so it's unknown. No reference to it has been made since.