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Wood is collected by chopping trees (both regular and birch trees (recently added in a new update)), rotted wood, stumps, and other items with the Axe. Trees can be grown by planting oak and pine seeds purchased from the Grocery. Wood also can come in a Basic Material Chest , be purchased from the Goods Stall , as well as be rewarded from certain quests.
Wood (along with stone) are one of the most important materials needed for repairing and upgrading buildings, crafting items, and building decorations, etc.
*GAMER TIP: Never sell spare wood and stone (or other building materials) and keep it in a chest as more and more is needed as you progress in the game.*