。
Wood floats on water.
Literal
Wood [topic-は] water [on-に] floats.
に here marks the location on which the floating occurs — the surface. 浮く ('to float') is intransitive; for 'put something in water to float,' the transitive partner is 浮かべる ('to set afloat, to cause to float'). Another member of the productive transitive/intransitive pair system.