Iron is an important material used for crafting weapons, armor, some decorations and notably Mineshafts and Stoves.
Iron may begin spawning on level 1. However, it will be an Iron tile and not a mineable block, and there won't be enough of it to make a Mineshaft on. However, digging on that spot may reveal a larger deposit of Iron underground.
Iron allows the creation of two Kitchen utilities, the Stove and the Cooking Pot. The Stove allows the production of the most filling food in the game, the Roast, while the Cooking Pot allows various stews to be cooked, expanding your options for feeding your Town.
Iron is one of the most important things your military can have. It is the logical step up from Wooden Armor and Stone Weapons, as it can be produced infinitely with the use of Mineshafts. However, Iron Weapons and Armor also require Coal. Fortunately, Coal can commonly be found starting at level 1.
In order to allow unlimited Iron production as soon as possible, the player should save at least one unit of Iron to make a Mineshaft for Iron as soon as four adjacent Iron tiles are found. It's easy to accidentally use all your Iron making Anvils, Smelters, and ITE Smithies.