What can you craft?
I played through episode one and was able to craft a stone sword, slime block, bow and arrows. When re-playing the episode I also found that I could craft a lever using cobblestone and a stick.
What can you craft in the game?
In Episode 1, there are three crafting puzzles. The materials you get are deliberately limited so there aren't many options.
In the first puzzle, you are supposed to make a sword. As you said, you can also make a lever. Petra will comment on how a lever won't be much good for defending yourself and let you take the materials for another sword. You will receive an achievement for this.
The second puzzle only allows you to make a slime block. You don't have enough string to make a lead so the slime block is your only option.
The third puzzle has two solutions. The bow and arrow is the obvious solution. You can also make a fishing rod, which will still solve the puzzle.