Quests are optional content. Completing them gives you stw points which are used for obtaining some items that are either hard to craft or not craftable. You may receive additional rewards depending on the quest.
Here are some of the most common quest objectives:
*meet a character: talk to someone and get to know the people in the world. Characters can give you tasks, items, helpful advice, and more.
*find locations: discover interesting places, or places important to the history of this world.
*find items: discover helpful or interesting items, or items important to the history of this world.
*craft items: some items may be very valuable and worth experimenting with, especially for trading with another player or character.
Some quests are solo while others are an entire quest line. Make sure you are prepared before doing quests with multiple parts, as some quest lines will reset any progress when you lose your items.
You can check the status of some active quests at the top of the options list.
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