1. You can use the bulldozer to demolish the buildings. In order to demolish a building you must position the bulldozer on the north-western corner (top-left).

2. Woodmills can be upgraded, so they will produce more wood. To do so, after you bought a woodmill, go to your Home and click on the desired woodmill.
You will see an Upgrade button.

3. The wood will no longer be collected automatically from the woodmills. You will have to go to your woodmills every game month and click the Collect button.