How do I make a build tool? (Script already written)

Alright, there are a few errors in this script, so let's just go through them one by one.

local hitTarget = game.Players.LocalPlayer:GetMouse().Hit

This line is completely useless, let's just get rid of it.

function cloneWood()
    local cloneTemp = game.Workspace.WoodBlock1
    local clonedWood = cloneTemp:Clone()
    clonedWood.Position = Vector3.new(hitTarget)
end
local tool = script.Parent
tool.Equipped:connect(function(Mouse)
    Mouse.Button1Down:connect(function()
        local hitTarget = game.Players.LocalPlayer:GetMouse().Hit
        cloneWood()
    end)
end)

But, oh no! Now hitTarget isn't defined for the function, and so it will be nil. However, there is a way around this, an arguement!

function cloneWood(hitTarget)
    local cloneTemp = game.Workspace.WoodBlock1
    local clonedWood = cloneTemp:Clone()
    clonedWood.Position = Vector3.new(hitTarget)
end

Now that's good and all, but you never parent clonedWood so let's parent that at then end of function.

function cloneWood(hitTarget)
    local cloneTemp = game.Workspace.WoodBlock1
    local clonedWood = cloneTemp:Clone()
    clonedWood.Position = hitTarget --you also didn't need that Vector3.new()
    clonedWood.Parent = game.Workspace
end

Alright, this is great. We have a nice little function defined, and we're ready to use it! But first, let's take a look at the second half of your script.

local tool = script.Parent
tool.Equipped:connect(function(Mouse)
   Mouse.Button1Down:connect(function()
        local hitTarget = game.Players.LocalPlayer:GetMouse().Hit
        cloneWood()
    end)
end)

I'm not sure why you do line 4 there, you already have the mouse thanks to the first line, let's just clean that up a bit.

local tool = script.Parent
tool.Equipped:connect(function(Mouse)
    Mouse.Button1Down:connect(function()
        local hitTarget = Mouse.Hit
        cloneWood(hitTarget) --and finally, send Mouse.Hit over to the function
    end)
end)

And as a final note,mouse.Hit returns a CFrame value, so you could either send over mouse.Hit.p to get the Vector3, or set the CFrame of your cloned part instead, your choice.

-- and your cleaned script
function cloneWood(hitTarget)
    local cloneTemp = game.Workspace.WoodBlock1
    local clonedWood = cloneTemp:Clone()
    clonedWood.Position = hitTarget
    clonedWood.Parent = game.Workspace
end
local tool = script.Parent
tool.Equipped:connect(function(Mouse)
    Mouse.Button1Down:connect(function()
        local hitTarget = Mouse.Hit
        cloneWood(hitTarget) --once again, mouse.Hit.p or just set the CFrame
    end)
end)