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The piece of wood is fastened with a single peg.
Literal
Wood-piece [topic-は] one-counter [possessive-の] fastening-peg [with-で] is-fastened.
~てある is the standard 'has been done and remains in that state' construction — distinct from ~ている. Where ~ている describes an ongoing or natural state, ~てある emphasises that someone (unstated) has performed the action and the result is in place: 'someone fastened it, and it's now fastened.' Useful for descriptions of objects that have been deliberately set up. 留め木 ('fastening-wood') is itself a compound built from 留める ('to fasten') + 木.