There are several different actions you can perform
You can use the wrench tool to edit different items. Sign - Allows you to post information on the sign that is visible when a user stands on the sign. Crappy Sign - Allows you to post information on the sign Door - Allows you to edit the target door, who has access, and assign a label Locks - Allows you to edit lock settings, most importantly who has world editing privileges.
If you punch a Door while standing on it you will enter the door. If not you will damage the door.
Punching blocks will damage the item and eventually destroy it. Different items take a different number of punches to destroy the item. There is a chance that most items will drop a seed that can be used to make more similar items or spliced to make new items.
Drop Chance - In most the item descriptions there is a 'Drop Chance' listed however there is no specific page listing what the 'Drop Chance' actually means or calculates too