The Dwarven Smithy Hammer is an artifact added in Heroes of Might and Magic V: Hammers of Fate. It goes in the weapon slot and increases the hero's attack by +3, and it grants a 25% protection from fire spells. The Hammer can be purchased for 9,500 gold.
The increase to attack is decent, but it is the protection that stands out. It is an useful item against the lowly Eldritch Arrow or the mighty Armageddon (the magic part). A weapon with protection abilities is quite sought after, particularly when facing Warlocks, Runemages or Nathir (or even enemy/neutral archmages, pit lords or rune patriarchs/keepers)