How to place 1×1 block instead of 2×2 blocks

As of the current Beta v. Enraged Koala, the only tools that can be directly upgraded are pickaxes, and their cousins, drills. The Stone Axe is the only woodcutting tool available in the game, though a chainsaw does exist in the game's files (but is unobtainable).

There are, however, a number of tool-related mods which might have something, if you want. And, there's always the possibility of just about anything being added in an update, including that chainsaw finally becoming obtainable.

1. Pickaxes are now used as a short-term method to mining slightly faster than the Matter Manipulator. They can no longer be repaired but are now much cheaper to craft. They also have a much more limited range than the Matter Maniplator

2. It seems 2 handed weapons of higher rarity, that shoot projectiles can damage nearby blocks (the projectiles won't damage farther away blocks, only the swing from the weapon itself). They can hit many more blocks than a pickaxe will, but take more hits to mine. You will also not be able to collect any blocks destroyed in this manner, so highly non-recommended.

   You can use both the projectile or weapon's swing to destroy background objects like plants and the destructible white chests, these you will be able to collect. This doesn't work on farm-able plants, just things like reeds in desert oasis' or jungle plants.

3. They can be crafted at an Iron anvil, or found in containers in some dungeons.