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The Mill is a useful Enshrouded workstation, but unlocking it takes more than dropping a few logs into a crafting menu. You need the Alchemist, several mid-game materials, and one unique item hidden in Veilwater Basin.

The first step is finding Balthazar, the Alchemist NPC. His Ancient Vault sits far east of the Springlands Ancient Spire. Once he has been rescued and summoned, gather these materials to build the Mill:
Wood Planks come from the Table Saw. Since 1x Wood Logs produces 2x Wood Planks, you need 15x Wood Logs to cover this requirement.
Lump of Clay can be mined in Revelwood. Look for orange-brown clay deposits and use a Pickaxe.
Iron Bars can be made in two ways. At the Smelter, combine 10x Iron Ore and 25x Charcoal to produce 10x Iron Bars. At the Blast Furnace, combine 20x Iron Ore and 40x Coal to produce 20x Iron Bars.
The final piece, the Improved Millstone, requires a trip to Veilwater Basin.

Only one Improved Millstone spawns per generated map. It is found in Riverreach at Dragondream Lake, northwest of the Nomad Highlands Ancient Spire. The route is still a long one because the terrain forces you around a mountainous area.

Important Note: Bring a Pickaxe. You need it to enter the room containing the Improved Millstone.
Riverreach is hostile, so move carefully and avoid pulling too many enemies at once. Crowd-control spells can help Wizard builds deal with the enemies introduced in the Wake of the Water Update.
Follow these steps once you reach Riverreach:

With the Improved Millstone collected, return to base and speak with the Alchemist. You can then build the Mill, along with the Water Wheel and Small Windmill Sails.
The Mill grinds specific items into dust or similar materials. Its listed outputs are:
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