A wood furnace is used to convert wood into ash or charcoal. It must be built out of fire-safe materials.
Operating a wood furnace requires the wood burning labor enabled.
Building a wood furnace requires the architecture skill and a skill relevant to the material used to make the furnace (masonry for stone or stone, glass or soap blocks, or any of the metalworking skills for metal bars or metal blocks).
Wood, charcoal, and coke are not an option as building materials for this workshop, as these are not fire-safe materials.
A wood furnace is the closest thing to a fire place. If you build one in a meeting hall, Dwarves will admire it and recieve a good thought, unlike any other workshop or furnace.