Medium-density Fibreboard (MDF), in all its densities, is made from wood fibres. Those would be little tiny pieces of hardwood or softwood. Combine these with wax and a resin binder, and form panels by applying high temperature and pressure.
MDF is generally denser than plywood. It is made up of separated fibres, but can be used as a building material similar in application to plywood. It is stronger and much denser than chipboard.
The main advantage of using MDF is that it is cheap, and it can be made to look like wood by staining it. Hence, you can get natural woody look you've been dreaming about for a fraction of the price you would pay for real wood panels. However, medium-density wood is weak compared to wood, so it can crack or split when under pressure. This is why you need to be very careful when you're installing it.
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