Right click to select your options.
You can level or make a path.
To raise ground you need stone and a nearby workbench.
To pave roads you need a stone cutter.

When leveling ground you will raise the ground to the level you are standing on. However, if you press shift and click, you will make a slope from/to.

Not much more to it than I can think of atm.

Oh..ya...the hoe will only raise or lower so much...you may need to use a pickaxe as well.