Hit tab
Craft hammer in lower right
Equip hammer by right clicking on it in inventory or putting it in a quick use slot
With hammer equipped right click
Crafting tab
Select workbench
Craft workbench
Workbench will allow you to build buildings and such.
Put roof over workbench
With roof over workbench interact with workbench
Here you can craft and upgrade the next level of equipment
To repair items interact with workbench look for a hammer icon near the top-middle of screen and click on it until all items are repaired. Repairs are at no cost of materials.