The Furnace can be used after it has been crafted and placed. To place the Furnace you must first craft it and move it to your Hotbar, from here you can move it around until the "Ghost Furnace" has turned Blue (Indicating it can be placed) Once the Furnace has been placed it can be operated by a player (Any player can operate it, however only 1 player can use it at a time) and shows an empty 1x6 grid.
To use the Furnace a player must place Wood in it and ignite it.The furnace will burn up to two Wood and create the smelted version of the materials every 30 seconds. Players do not have to be near the Furnace for it to operate, and it will keep burning until it is turned off or it runs out of fuel. A byproduct of the process is Charcoal, which you need to make Gunpowder. Furnaces will smelt each slot simultaneously, so it is more efficient to smelt multiple stacks of ore