The phrase implies a vigorous discussion, often picturing the back-and-forth effort in reaching an agreement. The committee will have to hammer out the finer details of the policy soon.
Pro Tip 2/3
Extended effort
Usually suggests a lengthy process with considerable effort, not something resolved quickly. It took weeks to hammer out the terms of the contract.
Pro Tip 3/3
Collaborative connotation
Indicates a collaborative process where all parties contribute to the final solution. The differing parties managed to hammer out a compromise.