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"One of the things we've focused on from the beginning was that gameplay must be involved in every system of the game," said Senior Designer (and honcho of the crafting sphere) Salim Grant, "so, we wanted to incorporate some elements of strategy by providing some limits to your actions and pitfalls that would manifest as risk when crafting." More complex than the World of Warcraft crafting system (where you just assemble your materials and click "craft") the Vanguard crafting system draws more from the EverQuest style of crafting by requiring materials and allowing for different grades of quality in crafted items.
Here's the basic rundown: you first collect the materials required by the recipe for the item you want to craft, then you put them all together using a crafting station and refine them to increase their quality.
Of course, it's not quite that simple; you have a limited number of Action Points that you can spend on fabricating an item, which includes basic construction and refining. So, the more points you spend on refining, the higher quality your item will be; however, as you tinker with your craftables, complications arise that you'll need to spend Action Points (and extra materials) to correct. You'll need to balance the amount of points you spend on construction and refinement with the points you will need to spend fixing any issues that occur during the crafting process.
Frequently, crafting in MMOs tends to result in lots of trash items being created just to get your crafting skill up (typically called 'mud-flation'); leaving you with forty runed copper daggers that nobody will ever buy. Salim has the answer, "we've put a lot of work into solving mud-flation, and our Work Order system is designed to combat that."
Work Orders are like quests given to you by your crafting trainer; you'll be asked to make a certain number of, say, iron spikes that will help boost your crafting skill. After the Work Order is complete, you'll get a tidy bonus of crafting experience points and/or some nifty new crafting gear that will help you do your job better.