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How to successfully repel hounds (Method)
STEP 1: Make a pickaxe if you don't already have one and go find some boulders, collect as many rocks as you can find, turn them all into cut stone make around 20-30 Stone Walls.
For 30 Stone Walls you will require exactly 30 rocks. (3 Rocks = 1 Cut Stone, 2 Cut Stone = 6 Stone Walls or 6 Rocks = 6 Stone Walls).
IMPORTANT: Stone walls are necessary because they are not flammable, which is important against fighting Red Hounds as they ignite upon death. Players should be careful of this.
Decide where your structure will be, (it must be close enough for you to reach it before the hounds attack) and then take your stone walls and start building a long and tight tunnel-like structure. It needs to be really tight, but wide enough for you to walk through. The tunnel must have an entrance on one end, and the other end must be a dead end (a tunnel with only one entrance).
STEP 3: Place the fire pit behind the dead end (in case hounds attack at night, this is the only way to protect yourself from Grue). Fire pit must be on the opposite side of the entrance because you will be standing in the tunnel's dead end. ALWAYS bring a grass tuft, berry bush, sapling, board, or anything that will keep the fire roaring for the entire night.
THE ATTACK: If you start hearing growling sounds, run into your tunnel (if its dusk or night, light the fire pit behind your tunnel). Stand at the end of the tunnel and wait for them (bring at least a log suit and a spear). If you have done this correctly, only one hound at a time will be able to enter the tunnel, meaning you will be killing hounds one by one, making combat much easier.
DEATH TRAP: When you obtain a fair amount of Hound's Teeth, make at least 8-12 Tooth Traps. Fill your tight tunnel with tooth traps (they must be placed really close to each other so that they can fit inside the tunnel), and then just let the traps do all the work. UNTOUCHABLE: If you have expanded your tunnel a bit, and made a lot of traps, then you are ready to start surviving hound's attacks without any weapons or armor whatsoever, as they will all die before even reaching you (if you have survived more than 100 days, 7-12 hounds will spawn every time they attack you, which means you will need to expand your tunnel even more and make even more traps).
TEETH FARM: This method is also helpful for crafting many items that need hound's teeth, such as dapper vests and sewing kits.
OPTIONAL: If your tunnel is long enough, you can also make a chest at the end of it. You can use the chest to store all the loot you get from the hounds. You can even use it to store some weapons and armor in case something unpredictable happens (Deerclops attack), or if your traps suddenly break and the hounds manage to reach you.