basicly, you take a load of ore, you build a small test furance, and you extract the iron from it, and get a "bloom" of impure iron.
that'll then get heated up hotter with a smelting furnace which has air pumped into it (for a small furnace, probably a few guys workingin rotation ppushing bellows. if it works, and you get good steel, that'd be replaced with water-wheel driven bellows)
that should get it nice and hot, and produce a passable load of wrought iron.
A load of that iron in turn is taken, heated even hotter, and carburised in a furnace, where more carbon is added (they did'nt know it was more carbon being added then... they just thought it was part of the process, and adding more stuff that burnt improved it).
that should end up with a ingot of steel.
so the ingots of iron will be handed to a blacksmith, and he can decide if its good iron, or bad iron (crumbly, brittle, etc)
the steel ingots will likely be split into smaller, and folded about a bit and then hammered into a blade or a plate, and then hardened by quenching and tempering...
if its good steel, it'll be strong and hard.
if its bad, it'll be brittle and crack easily when hit...