"The Hatchet is light and fast, allowing it to overwhelm opponents in close with solid damage, although it suffers in reach. Heavy damaging throwing weapon with low ammo."[1][1]
The Hatchet is actually one of two different weapons in game, one being a Throwing Axe for the Vanguard & Knight, with the other being a Melee weapon for the Man-at-Arms & Vanguard. Like other axes, it deals swing/blunt damage.
Hatchet (Ranged)
This Knight/Vanguard throwing weapon is a great introduction into a battle, and is often one of the first attacks a vanguard does prior to entering the fray. It does a modest amount of damage and can finish off wounded enemies fairly easily, albiet usually both axes are required to gain a kill. The throwing hatchet also gives the heavy armor classes a legitimate anti-archer weapon that can be used at range. However, it has a steep learning curve due to the weapon's bowed trajectory, so using it at mid range can even be difficult for all but the most trained. Use it when the enemy is catching up on you on a hill and the downward trajectory can have some advantage. This throwing weapon can also be very useful against a fleeing enemy if he is to run away in a straight line and therefor making it easier to hit him in his back.
Hatchet (Melee)
This Man-At-Arm/Vanguard melee weapon is a starter axe that features good speed and damage at the cost of range. In fact, this is the shortest non-dagger weapon in the game. However, this weapon boasts significant damage for a 1handed weapon, with speeds only slightly slower than daggers. That makes the Hatchet a deadly weapon in the right hands, able to overwhelm and kill a foe before they realize it. Like other axes, it deals Swing-Blunt damage, making it effective on Knights but only above average against Vanguards.
Due to the weapon's fast attack rate, the overhead swing is highly recommended as a major means of damage, and can dish out extreme pain within a small timeframe.
Since the weapon lacks a edge on its top, its stab is very weak and not recommended.
Trivia
The Vanguard is the only class which can use the weapon in both Melee and Throwing Axe forms.