Wood works well as an insulator because of all the empty space that it contains. Insulators contain heat and other forms of energy rather than transferring them to another object. Conductors, on the other hand, transfer energy easily; many metals are among the very best substances for energy transfer.
The ideal insulator for energy is a vacuum, or space that is completely empty, because the absence of molecules means that no vibrations are taking place. Vibrations at the molecular level build heat energy. While wood appears solid, it is a highly porous material, and there are internal crevices within wood that store heat readily.
One way to test this is to place a wooden spoon and a metal spoon into the same pot of boiling water, with the handles resting against one edge of the pot. The metal spoon becomes hot to the touch long before the wooden spoon does. The metal spoon conducts the heat energy from the water to the hand of the person touching it. The wooden spoon, in contrast, absorbs the heat energy inside, and the handle remains comfortable to the touch. Other substances with gaps on the inside, such as Styrofoam, also make good insulators.