Slaves to Armok: God of Blood, Chapter II: Dwarf Fortress

The Manual: Making Crafts

To the dwarves, all of this mining would be pointless unless the end result is a fortress filled with treasure. Once you've mined out some stone, you'll be ready to make crafts. You can also make objects out of wood, bone, shell, glass, silk... whatever your dwarves can get their hands on. You can also decorate existing objects with these materials.
In order to make crafts, you need the following: For technical help with these matters, follow these links:
Setting Professions
Creating Building Tasks

Now let's discuss the individual materials.

Stone

Stone is simple. Use the mason or craftsdwarf's workshop to assign jobs. Stone is buried under a few layers of soil in low-lying areas, so dig downward if you have trouble finding some.
Certain varieties of stone, like limestone, are used to further operations at the smelter. If you want to use these in jobs, you'll have to enable them from the Stone Restriction screen. Stone Restrictions

Metal

Metal is more valuable than stone, but also harder to find and process. The ore that you find must be refined at a smelter. Then you will have bars. Bars can be made into objects at the metalsmith's forge.
These processes require fuel. You can use charcoal made from wood, or coal fuel from coal refined from the mountain.
A metalsmith's forge requires an anvil. You can either bring one with you or request one from the outpost liaison and trade for it the next year.

Gems

Gems are rare and valuable. When you mine them from the mountain, they are initially "rough". Rough gems are unfinished stones that need to be cut by a jeweler. Build a jeweler's workshop to assign these jobs.
Rarely, the gem cutter will be inspired and make a large finished gem or gem crafts. Most of the time, you'll obtain small gems. These objects are valuable in their own right, but can also be used to encrust other objects.

Wood

Wood is easy to obtain and requires no processing. It is also an early source of fuel and can be used to make lye. Cut wood by designating trees for logging outside. You can then use the logs at the carpenter's workshop, the bowyer's workshop and the wood furnace. Keep in mind that wood is the only material that can be used for beds and axles, so it's good to keep a steady supply of logs coming in from outdoors.
Designations

Bone and Shell

Bone and shell are the debris of eating and butchery, but they can be used to make crafts or enhance existing objects as well. This work is done at the craftsdwarf's workshop.

Leather

Raw skins are obtained from the butcher's shop any time a corpse is butchered, and these can be processed at the tanner's workshop to make leather. The butcher and tanner assign jobs automatically.
Leather can then be used to make clothing, armor, backpacks, quivers, bags and crafts. Soldiers use backpacks to hold food so that they can stay on duty longer. The value of leather depends on the creature.

Cloth

Cloth is made at a loom from thread. Thread is obtained from plants which have been processed at the farmer's workshop. Cloth can be used at the clothes maker's shop to create clothes, crafts or bags.

Silk

Silk is like the cloth made from plant, but generally more valuable. You'll occasionally find webs in your fortress, and if you have a loom, a task will appear automatically which lets the dwarves collect these webs. Once you have silk cloth from the loom, you can use it like standard cloths.

Glass

Glass is a fairly valuable material and can be a decent early trade good. If you have a bag, you can create an order to collect sand at a glass furnace.
In order to collect sand, you need to create a sand collection activity zone. Activity Zones

Using sand, you can create green glass goods at the glass furnace. Green glass isn't very valuable, but if you also have pearlash, you can make clear glass. Pearlash is potash which has been baked in a kiln. As described in the paragraph on fertilizing farms, potash is obtained by evaporating lye water, and lye water is obtained from soaking wood ash at the ashery.
You can also substitute sand for rock crystal in the clear glass recipe to make crystal glass, which is quite valuable.

Soap

Soap is a fairly valuable commodity, but its creation is somewhat involved. First, you need to create an alchemist's lab. Read about clear glass above to figure out how to make the glass vials you'll need for the lab. Once you have the lab, lye and some rendered fat, you can produce soap. The value of soap depends on the creature. Unrotten fat can be rendered in the kitchen.