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The Machete is a melee weapon. Like the Hatchet it is normally put into your toolbelt but can be taken out to replace your main weapon if any by Right Clicking and selecting, "Remove from tool belt." If you have a Main Weapon in hand when you do this it will drop that weapon. 

Unlike the Hatchet it is not useable for other tasks but it does enough damage to kill a Player in one hit to the body. It appears to take 3 hits to kill a Bloodsucker. 

The most likely place to find a Machete is in a Deer Stand although they will also appear in Farm loot piles.