The first boss of the game awaits you in the middle of this area. Make sure you're prepared to face the Mighty Oak before you engage him - he's a lot tougher than any foe you've fought so far.
After you beat the Mighty Oak, grab the Axe from the chest behind him. This will allow you to chop down the little trees you've been seeing throughout the forest. Feel free to backtrack and see what new paths you can unlock with this before proceeding.
Once you've ransacked the chests and are ready to move on, chop down the trees on the east side of the screen and continue forward to meet Lance.
When you get the Hammer, you can smash the boulders on the east and north exits. The former leads to Lankyroot Jungle, while the latter leads to the edge of Goldenbrick Resort (although you'll have to come around the other side to do much there).
CHESTS AND SECRETS:
Secret #1: 3 Amber
Chest #1: The Axe (key item)
Chest #2: 1 Beef, 3 Soft Wood, 1 Lanky Root
Chest #3: Destroyer (gun), 1 Cactus, 2 Lemon
Chest #4: Gaia's Bow (bow), 6 Dirt Ball, 1 Ham
Chest #5: 1 Copper Key, 3 Iron Ore, Red Jacket (male armor)