The forge
What the blacksmith does: craft a piece, upgrade it up its level ladder, add stars, renovate its lines and dismantle what you do not need.
The blacksmiths in the cities keep a full bench (the world atlas names them under Forge). The bench shows the cost and the result of every action before you confirm it. To try it without spending anything, use the forge simulator.
Craft
The blacksmith crafts each class's three series (Balanced, Resistance, HP) in the eight combat slots. Choose a level on the slot's ladder; each slot has its own steps. Crafting needs materials and Gold but no character level: wearing the piece does. Socketable pieces sometimes arrive with holes already punched.
Upgrade
An upgrade always succeeds and moves the piece one step up its ladder. The first upgrade from level 0 rolls every line again; after that, each line keeps its roll and grows with the level. A purple piece gains its missing optional lines when it crosses level 60. A worn piece cannot go above its wearer's level.
Stars
Stars raise every flat stat on the piece (critical-damage and absorption percentages stay as they are). The first stars use Enhancement Gems; from +10 they use Premium Enhancement Stones, and feeding more stones into one attempt raises its chance.
A failed attempt keeps the piece but costs stars, and from +8 it falls back to +0, unless a Memory Gem is added to the attempt. Stones and Gold are spent either way.
Renovate
Renovating always succeeds. Every guaranteed line rolls its strength again, and the optional lines are drawn again in full, keeping the same number of lines. Level, stars and sockets stay. It cannot be undone: compare the before and after first.
Dismantle
Dismantling destroys a piece and gives back crafting materials from its stage. Its stars and socket stones are lost with it; the bench warns you first.