What is the difference between MDF, chipboard and plywood?

All three are engineered boards made by bonding wood together, but the form the wood takes is completely different and it determines what each is good for.

MDF (medium-density fibreboard) is made from wood fibres broken down to pulp, mixed with resin and pressed. It is dense, completely uniform, and has no grain — which is why the cut edges are smooth enough to paint directly and why it machines into crisp mouldings and curves. It is the standard for painted furniture, skirting, shelving and cabinet doors. Its weaknesses: it is heavy, it swells irreparably if it gets wet unless it is the moisture-resistant grade, and it holds screws poorly in the edge, splitting readily unless you pilot-drill. Cutting it produces very fine dust that requires a mask and extraction.

Chipboard (particleboard) is made from larger wood chips and flakes pressed with resin. It is the cheapest and lightest of the three, which is why flat-pack furniture and floor decking use it. It has poor screw retention, sags under load over a span, and disintegrates when it gets wet. Its cut edges are coarse and need banding or a lipping.

Plywood is made from thin veneers of real timber glued in alternating grain directions. That cross-grain construction is what makes it by far the strongest and most dimensionally stable of the three, and the best at holding screws and fixings. It is used structurally, for anything load-bearing, and for anything that may get damp — marine and exterior grades exist. It is the most expensive, and its layered edge is visible unless covered.

The short version: plywood for strength and moisture, MDF for a painted finish, chipboard for cheap and dry.