The Lumber Mill is used for depositing lumber, it is also required in order to build and upgrade Lumberling Huts and Lumber storages. It is almost entirely made of wood. You can upgrade the Lumber Mill.
Although the "maximum" amount of Lumber Mills you can build when you start is one, there was a glitch that could let you build a second of everything. It is unknown if this glitch is still in the game, as a recent bug(?) with the fullscreen and camera rotating suggests some updates are in place.