To sit down outside wood is most foolish (7)
I believe the answer is:
rashest
'most foolish' is the definition.
(rash can mean foolish)
'to sit down outside wood' is the wordplay.
'to sit down' becomes 'rest' (sitting down is resting).
'outside' is an insertion indicator.
'wood' becomes 'ash' (wood from an ash tree).
'rest' placed around 'ash' is 'RASHEST'.
'is' is the link.
(Other definitions for rashest that I've seen before include "Most foolhardy" , "Most impetuous" , "Most adventurous" , "Most reckless" .)