The Wood Sword is the first melee weapon that you can craft, and definitely better than your awkward starting Twig.
You can create the Wood Sword in your Crafting Menu (default key "Q") or at Crafting Tables (that still exist in older worlds created before September 2015).
To choose different alternative materials for crafting you can click on any material-icon that has 2 small golden arrows to scroll through all available options - like the Wood for this Sword.
To craft 1 Wood Sword, you'll need (as of R27 in January 2016):
- 5 (blocks of) any kind of Wood or Log, found in Woodlands, Forests and many other Biomes and can be harvested without needing any Power Cell
- 1x Vines, taken from Cragwood-trees in Woodlands or Forests, or from Wildwood-trees in the Jungle, or obtained from several kinds of Leafies
The crafting-recipe for the Wood Sword is already known/unlocked right from the beginning. Crafting/taking the Wood Sword will then unlock the recipe for the Stone Sword.
To use the sword (instead of your starting twig) you must right-click on it in the inventory which will place it into the weapon-slot next to your character's portrait. Afterwards you can switch between weapon-mode, tool-mode and harvest-mode with TAB (default key).
From time to time you can find (already crafted) Wood Swords in Stone Treasure Chests in the underground Fossil Layer in shallow caves or as a Keepa-loot/-pet-harvest.
The Wood Sword can also be used as a Fuel, but does not have a better fuel value than any kind of Wood.
Before R22 the Wood Sword had also unlocked the recipes for Leather armor, which will now be unlocked by taking Leather (for example from the Loot Bag of a Pigsy).