Resources are needed to build Wonders and higher level items in the Functional and Happiness Build menus.

So far they are only required to build buildings.

The Mill, Quarry and Mine all produce Resources after a 24 hour count-down. They are also dropped randomly from Camels.

The highest value resources Red Wood, Red Marble and Gold are only produced by Royal level Resource buildings. These are considered much more valuable than Rare Goods and Trade for much higher value.

There are four levels of Resources, (Village is lowest, Royal is most valuable). See here for a list of known resources.

Mill Quarry Mine
Village Driftwood Stone Bronze
Town Softwood Sandstone Iron
City Hardwood White Marble Silver
Royal Redwood Red Marble Gold