The dwarf labors in the workshop for a while and creates the item.The dwarf fetches all the necessary ingredients and brings them to the workshop.(if any stockpiles are set to give to the workshop, only linked stockpiles will be looked in!)
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(* if the finished product has any quality modifiers - not all do: Processed milk is just cheese, a stone block is just a stone block, and a tanned hide is just leather, etc.) Just as they have specific products associated with them, they have specific labors that are required by dwarves to build them or to work there, and dwarves with more of the appropriate skill tend to produce higher quality objects*, and/or produce them faster. There are many different types of workshops, for different purposes and different finished products. Anything that is created, refined, cooked, altered, decorated, or generally "produced" is processed at a workshop.