Dan McCoy has the scoop at Norse Mythology for Smart People, and he deserves a link purely on the name of his website!
Thor’s hammer was certainly a weapon – the best weapon the Aesir had, in fact – but it was more than just a weapon. It also occupied a central role in rituals of consecration and hallowing.
The hammer was used in formal ceremonies to bless marriages, births, and probably funerals as well. In one episode from medieval Icelandic historian Snorri Sturluson’s Prose Edda, Thor once killed and ate his goats, then brought them back to life by hallowing their bones with his hammer (talk about having your cake and eating it, too). The medieval Danish historian Saxo Grammaticus records that huge hammers were kept in one of Thor’s temples in Sweden, and that periodically the people would hold a ritual there that involved beating the hammers against some kind of drum that would resound like thunder. This could have been a ceremony to bless and protect the community and ward off hostile spirits.
There’s lots, lots more.