Nothing is as devastating as running away with a few hundred health only to be tagged with a paladin's Hammer from long range.
There is no minimum range on the Hammer; it can be used at point-blank distance.
The attack is resolved as a ranged special-attack that does non-physical damage, similar to a Hunter's Arcane Shot. It can miss, it can be blocked (if the target is facing you), and it does double damage on a crit. Hit Rating and Crit Rating improve your chances of hitting and critting, respectively.
The Retribution-centric Tier 6 Paladin Armor Set Lightbringer Battlegear includes a 4-piece set ability that increases the damage dealt by your Hammer of Wrath ability by 10%.
Patch 3.0.3 (04-Nov-2008): Now can't be used until the target is below 20% health. Tooltip has not been updated accordingly.
/Patch 3.0.2 (14-Oct-2008): Hammer of Wrath is now considered a Retribution spell, moved from Holy, mana cost reduced, now instant cast, global cooldown increased to 1.5, missile speed increased, now usable on targets below 35% health and now scales with attack power and spell power.
Patch 2.3.0 (13-Nov-2007): Hammer of Wrath mana cost reduced.
Patch 2.2.0 (25-Sep-2007): Hammer of Wrath cast time reduced to .5 seconds, global cooldown reduced to .5 seconds.
Patch 2.1.0 (22-May-2007): Hammer of Wrath: Rank 4, damage increased.