Milling skill is used to saw logs into planks, which Carpenters need for most of their later carpentry projects. You can also sell planks at a Carpentry Shop. To saw logs, you must have a Saw.
Double-click on the saw, then select the log you want to cut. After 6 seconds you'll be told whether you cut it properly, or destroyed it. The odds of successfully sawing a log equals 23% + (Milling Skill / 2) + (Dexterity/6).