What should I be doing with the materials I get from mobs? Like animal skins, varnish, animal bones etc?
I've typically just been vendoring them but I understand that later on this probably isn't a smart idea.
Should I save materials to sell to other players? Do I do this just by making my character a shop somewhere busy?
Is it worth doing this with the newbie mat drops or will I not be able to sell them and thus should just vendor them?
I understand seeding gives these mats too. Is it worth seeding from the get go (i.e. level 1) or would that slow down my levelling time by quite a lot?
Materials (Mats) are broken down into two groups; key mats and basic mats. Key mats can only be used to make one specific item (Like 'leather boot lining' whose description would read 'used by dwarves to make leather boots.') Basic mats are used to make many types of items (like 'varnish' whose description would read 'used to make dwarven items.')
Key mats for things under B grade are usually not worth keeping. There are exceptions for items that complete sets and are not purchaseable in NPC stores, like elven mithril glove parts, manticore boot parts, brigandine shield and helmet parts, Half-plate parts (all types.)
Basic mats should be saved. You will need them to craft your own equiptment later in the game. If you feel you have to sell them, go to giran and look in shops to see what prices are for your mats. You then set a 'sell' shop yourself, entering the prices you wish. Those prices will be MUCH higher than what you get from the NPC shops.
Adding to what's above, consider the time value of money. When you're a dirt-poor lowbie, the rain-storm of adena that flows from selling this stuff to other players means a lot. When you're a level 40, collecting mats to make your weapons, that same small fortune is a pittance. Same adena cost, but its value to you is drastically different. So I would say sell it when the adena will do you the most good, and buy them when the materials will do you the most good. The actual adena cost will be a wash.
To craft a Dasparion Staff (Grade a Mage staff) you gonna need 9400 thread, to make metalic thread, or have all this material, if you start sell all your threads, you gonna have problem in future.
For the other way, if you are all time selling basic material this value will not make a big and strong difference in your economy.
To make monney you must go to raid party, look seller to see some big oportunit, open seller during nigth (leave your computer on) and try to find a good quests to your class.