I'm no expert on this so this is my limited understanding.
A wood pattern is used for a complex pattern such as sandcrawler body, anything which has a sharp edge and therefore more difficult to make in clay or silicon. It is made of wood and is larger scale than the figures or ships. Bits could be added to it by gluing or shaving. The pattern is traced using a pantograph machine which then creates the moulds in far better detail than could be achieved otherwise.
Here is an article I had the pleasure of interviewing Gus about a year or so ago.
http://www.starwars.com/news/jawa-joy-kenners-sandcrawler-pattern-unearthed