The Item System got revamped.
Each item has a level and a point value. Level one is worth 1, 2 is worth 2, 3 3 etc. Each takes Worth + 2 to craft. Example:

You have 4 items, 2 level 2 and 2 level 1. They are worth 6 Points.

You click on the Blue Hammer that now shows a 6. You confirm and get a Tier 3 item, because you spent 5 points to craft it. You now have 1 Tier 1 Item and 1 Tier 3 Token.

Undeads are more complicated. There are 3 Ways to get them afaik:

1. The most likely: Tier 2 Item, (some cape or smth, forgot the name). When a Unit with a level(Unit Profile, bottom left) below 5 survives a round it gets destroyed and you get a unit with an equivalent level on your bench. Example:
You put the item on an Axe 2 and it survives. It gets revived into Winter Wyvern 2.
Juggernaut 2 etc...

2. When ANY Unit is sold, it goes back into the shop-Pool. That includes normally unavailable units, like pandaren or undead. If you sell an undead, your enemies could buy them in the shop later on.

3. The New Relic MAGIC BOX. You have 12 Charges to select any tier 1 unit on your bench to reroll it into another unit by the next round. You can get Undeads(Pandaren too) by using it.

Thanks!