Does judaism believe in the last day? why did prohet Isaiah says I saw near earth and new heavens?

65:17 in this chapter says See I will create new heavens and a new earth the former things will not be remembered nor they will come to mind... I can understand for the last day or the end of this world and new era like the christian way? and I have another question according to judaism is it God merciful because he punished many people in the torah specially those who worshiped the golden calf and the horrible dead of the innocent babies in egypt exodus 11 and exodus 32:27 this horrible thing that moses ordered against their own brothers of israel for me each man strap a sword to his side. Go back and forth through the camp from one end to the other each killing his brother and friend and neighbor, 28 the levites did as moses commanded and that day about three thousands of the people died .. please explain me this and your point of view or what do your sages say about this?