Lollipop Hammer is one of the boosters in Candy Crush Soda Saga that is unlocked in level 7. It is activated in-game by clicking the corresponding button in the top right (right under mobile) corner of the screen. Click the same button again to deactivate it.
It is a booster that the player can use to remove a candy or a blocker without using a move. You can smash once into any candy or most blockers. For example if you hit a multilayered cupcake, it will remove one layer.