Until you get your pickaxe, it will be a pain to truly level ground (and even then it's a bit complicated). First let me give some tips, then I'll explain how I go about it.

Just clicking with the Hoe equipped attempts to level the ground relative to where you are standing. This is great for making flat foundations for buildings (or gardens). However, it can only increase/decrease the level of terrain so much.

Holding Left-Shift and then clicking attempts to level the terrain in relation to wherever you click, NOT wherever you are standing. This is mostly useful when trying to make paths/roads.

When I am trying to make a flat foundation for a building, I typically level out a small area, then place some wood flooring down. I stand on the flooring, and attempt to level out further, then build more floor, etc. The floor helps me to see what is perfectly level and what is not. When there are bumps/raised parts, I take out my pickaxe, mine it down a bit, then take out my hoe and re-level it, until I get it just right. If there are areas that are LOWER, I use the hoe's right-click menu to raise the ground just a bit, then go back to level it immediately afterwards. Using this method, with patience, you can have a perfectly flat area for building.