First thing to do when using the hoe to level land is to zoom out to maximum even before equipping it.

By doing that, you will be able to lower your vision to almost horizontal, giving you the perfect angle to check if the ground is in fact flat.

Also, keep in mind you're actually moving dirt from one spot to another. Sometimes it may be a good idea to increase the height of the land a bit, before going to level it.
That way, you create the "dirt" required to fill up the holes elsewhere.

Thorin :)