Originally posted by NiceGuy:

So you do know how the hoe works? The hoe ALWAYS tries to level the ground you aim at, to the same level you STAND on. It's indicated by a small yellow/white vertical line on your cursor how much the terrain difference is.

Odd. It's not working. I can burn my entire stamina bar trying to level a single location without moving the cursor at all, and it bounces from being below my standing height to above, never actually meeting it.