The handkerchief in the middle of the screen works like a crafting table - all the items you want to combined will be moved right there. To start crafting, you need to enter your inventory screen (by pressing the 'I' button). To craft or upgrade items, all you need to have are the necessary crafting materials, as well as the knowledge which items can be combined to create the desired product - some of them are really simple and intuitive (like Stone and Stick, which, combined, gives you the stone axe, or Booze and Cloth, giving you a Molotov), which is why you shouldn't really have any problems with it. Some of those items can be further improved, giving them additional attributes or simply increasing their overall combat capabilities. In The Forest the player is not limited to constructing buildings, but can also create dozens of items - weapons, medicaments or other useful tools. The inventory screen is also used to craft and upgrade items.
