You can obtain Steel Ingots by mining Steel Ore.
You use Steel Ingots to craft it into its own set of tools.
To craft a Steel hovel, Steel Hoe, Steel Axe, Steel Pickaxe or a Steel Sword you can just use the regular crafting recipes but instead of a normal "Iron Ingot" you use a Steel Ingot. U can also craft other tools using steel: Soul Lighter, Berry Collector,
You can also craft a Steel Armour , to do that you also use the regular crafting recipe of every armour piece but instead of "Iron Ingots" you use Steel Ingots.
Last but not least you can also craft Steel Blocks by combining 9x Steel Ingots in a regular crafting table.