The workbench is a feature of your Campsite. It is located immediately to the left of the Garden Boxes, and immediately to the right of the Campfire. It is where you can craft new Tools, upgrade existing Tools, and craft various Resources.
The workbench can, itself, be upgraded.
Using the Workbench to Craft and Upgrade Tools and Resources Edit
To craft a resource, craft a tool, or to upgrade a tool, you must have the required amount of resources in your inventory. You can check the resources, and the amount thereof, required for each task by Using the Workbench. To do this, approach the Workbench until the Interaction menu appears. Click the Use icon or press the corresponding hotkey. This will bring up the Crafting window. The Crafting window contains all of the recipes for Tools and Resources that you are currently capable of crafting or upgrading. To view these recipes, navigate through the list by clicking on the Orange arrow to the immediate right of the Crafting window. The arrow can be a little difficult to see at first, but look closely and you will find it. If you skip past the recipe you are looking for, you can click the arrow to the immediate left of the Crafting window to go back. If an arrow does not appear on either the left or the right of the window, that is because you are at the beginning or end of the list, respectively. Clicking outside of the Crafting window will close the window.
If you find a Tool you want to upgrade or a Resource you want to craft, navigate to the recipe, then click on the Craft button located in the lower left-hand portion of the Crafting window. If you are crafting a tool for the first time, the newly-crafted tool will appear in one of your Tool slots, if you have one free, or will be placed in your Stash if both slots are occupied. When upgrading a tool, it is not necessary to have the tool equipped. Once the upgrade is complete, the upgraded Tool will replace the previous version of the Tool in either your Tool slot or stash. You may only have one of each type of tool.
Crafting a resource is similar to crafting or upgrading a tool, only you must have a free slot in your inventory, or a slot containing fewer than 10 of the item you intend to craft. You must also have all the required resources in your inventory, and otherwise meet the Requirements specified by the crafting recipe in the Crafting window.
Upgrading the Workbench Edit
Each upgrade to your workbench will change its in-game appearance. It will also enable you to craft additional Resources or further upgrade your Tools.
In order to upgrade your workbench, you must have the required Resources in your inventory. Each upgrade will also cost you a specific amount of Stars.
Each upgrade also requires an upgraded Hammer. Upgrading the workbench to level 2 requires a level 1 Hammer. Upgrading the workbench to level 3 requires a Level 2 Hammer.