Terraria has a different approach to crafting than games like Minecraft. If you have the items required to craft a certain item, it will appear in your crafting list when you open your inventory at the left side of the screen. This list will update when you are standing next to workstations such as a workbench or a furnace. A furnace is instrumental in upgrading your tools, weapons, and armor. It is a simple recipe that is crucial for progressing in Terraria.
You can find stones anywhere. If you dig down far enough you will hit stone, or if you run in either direction you will find stone. Torches are made with one gel and one wood. Wood comes from trees. Chop at them with your axe to get the whole tree to fall. Workbenches can be made from wood. Hit the bottommost tile of trees with your axe to get some wood.
Try to locate some stones. There are many crevices that spawn from the world generation. Find a tunnel down or dig a tunnel down yourself.
Stone blocks will have a gray stony texture. Gather up twenty blocks with your pickaxe.
Next you will need to find a gel to craft torches. Slimes will spawn intermittently, any kind of slime will drop gel.
Swing at them with your pickaxe or your sword in order to defeat them. Every slime you defeat should drop at least one gel. Kill a couple slimes to get the gel you need.
You should have spawned next to some trees. Feel free to chop some down to get the wood you need.
Open your inventory and scroll down in your crafting menu to locate the workbench.
Left click the workbench icon to turn ten wood into a workbench. In order to use your workbench you only need to place it and stand next to it to update your crafting menu with everything you can currently craft. Make some torches by scrolling up to the top and clicking on the torch icon.
You will need one wood and one gel in order to make three torches. With your wood, torches, and stone, stand next to your workbench and scroll down to the furnace.
I recommend placing your crafting stations close by each other so you do not have to move around too much while crafting your items. With your furnace placed you can now smelt ores into bars or into the bricks of the ore type.
After entering hardmode, the best furnace in Terraria would be the titanium forge or the adamantite forge, depending on which ore your world generated. They are functionally identical and will smelt every end-game material you find.
Furnaces in Terraria do not need fuel! They are only required to be placed nearby for you to be able to smelt ore.
Furnaces will always be lit in Terraria. As long as they are placed, the light you get from furnaces will always be there. You do not need to fuel or light your furnace in order for it to work. You just need to be nearby and open your inventory to craft ores into bars.
Congratulations! You now know how to make the basis for every pre-hardmode ore. Making a furnace is the first step in progressing through the game. Furnaces are a fundamental part of Terraria and you can make one very easily.