Special thanks to Picho, info taken from Nodiatis forum.

To cut wood, you need a wood axe, sold in T2 (Stronhad) for 1600 gold. Once you have that, you need to find an area that you can cut wood in - anything with trees in the background during combat will work. Successfully defeat a monster, exit looting, and click the Axe icon that appears at the bottom of the screen. You are now in the Woodcutting mini-game. There are three bits of wood that you need to hit with your axe, and they will be moving up and down. Aim with the mouse, throw with the space bar. Once you hit all three, you will get a piece of wood.

Wood can be turned into planks with a Planing Tool (1400, T2), combine them with ore to make ingots, or use them in recipes.

Woodcutting Level Required to Process Woodworking
Rotting Twigs 0 Rotten Plank
Dry Sticks 3 Stickboard
Blanched Twigs 6 Blanched Plank
Mossy Branches 10 Mossy Plank
Sappling Bundle 13 Sappling Plank
Fungal Twigs 17 Fungal Plank
Aqua Twigs 20 Aqua Plank
Bundle of Limbs 24 Dry Wood Plank
Giant Fagot 27 Frail Plank
Crystalized Twigs 30 Brittle Crystal Plank
Oak Log Sound Oak Plank
Petrified Log Petrified Plank
Amber Log Amber Sealed Plank
Lava Log Lavawood Plank
Bacteria Branch Bacterial Hardened Plank
Jade Log Solid Jade Plank
Icey Birch Log Icey Birth Plank
Stone Cacti Branch Stone Cacti Plank
Sporewood Sporewood Plank
Striped Sunlog Striped Sunlog Plank
Great Oak Stump Great Oak Plank
Enchanted Magnolia Stump Enchanted Magnolia Plank
Amethyst Tree Stump Wooden Amethyst Plank
Giant Cherry Stump Giant Cherry Plank
Malachite Tree Stump Malachite Plank
Heavenreach Stump Heavenreach Plank
Kettle Tree Stump Kettle Tree Plank
Deformed Shroom Stump Shroom Stem Plank
Limbermill Stump Limbermill Plank
Fireheart Stump Fireheart Plank
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