Complex sentence: The latter part, "hamsted", derives from the Old English word for homestead, and thus the town can be understood as either the "homestead amongst the hills" or the "homestead among the birches".
Split into simpler sentences: The latter part, "hamsted", derives from the Old English word for homestead. So the town's name could be either mean "homestead amongst the hills" or the "homestead among the birches".