A Lumbermill is a structure, made with 4 Wood segments.
It's only use is for making planks. To make Planks, simply place a tree trunk/large tree trunk into the top hole, and the Planks will come out of the side. The Planks can then be used to create furniture such as a Chair, Bookcase, etc. The Planks can also be used to create Wood Segments or Wood Hulls.
It is possible that the turbines attached to the mill will glitch and stop moving/move slower, or even fall off, but you don't have to worry, the mill will still function properly.