They seem to be similar to the real life equivalents of hardwood & softwood. Conifers like pine, fir, spruce are softwoods and are commonly used for framing and housing exteriors, while hardwoods like birch & oak are generally used in manufacturing desks, tables. Valheim does sort of have it backwards in the sense that using hardwood is preferable to softwood for heating & cooking fuel, as it tends to produce less smoke & resin when burned. Having birch & oak produce both regular wood & fine wood has a level of realism to it in the sense that the branches of both would in real life only be good for kindling/firewood & roof thatching.