A Recipe is the definition of the output of combining two Items. For example, a recipe for creating a sharp sword would be the combination of a worn out sword item with a grinder item.
Creating a Recipe is as easy as clicking on the "Create Recipe" button on the Recipes tab in the Preferences Window. Then, select the two items you want to combine and the amount that are needed.
All that's left to do is specify the effects of combining two items.
In the previous screenshot, we can see how combining a Wooden Stick and a Metal Lingot will execute the Actions sequence defined below:
Play a success sound effect
Give the player an item called Battle Axe
You can tell the game to combine two Items using the Recipe Action that comes with the Inventory module or dragging and dropping one item onto another one in the Inventory UI.