Fog does something odd to a landscape: it takes away edges. In these few lines, the speaker describes that loss as a kind of comfort. "All is one in fog" suggests that the usual separations between trees, ground, and sky have dissolved, and the second line, "a fine wool," gives that blur a texture. Fog is not cold or threatening here but soft, something you could wrap around yourself.
The second stanza shifts from sight to sound. The grove is "like a riff," a short repeated musical phrase, and it is only "half-way to the ear." That suggests the trees can't be seen clearly, so they arrive as something half-heard, half-imagined, like music from another room. The senses blend together, which fits the idea that everything has become one.
The mood is quiet, hushed, and a little dreamy. The speaker seems calm and attentive, content to let the world go indistinct rather than trying to sharpen it.