Before that you cut a notch in the bark for the whistle bit and then afterwards you replaced a sliver of wood to direct the air to the notch, just like any other whistle.
The insert is called a "Fipple"....Diagram from Wiki shows how it is shaped.
Cross-section of the head of a recorder, indicating the wooden fipple plug (A), a "ducted flue" windway (B), and the "labium" (lip) (C) which forms the far edge of the "voicing mouth" The labium splits the air flow and creates resonance.
With regard to the sap rising, this is drawn up the cambium layer (just under the bark) first by positive pressure from the root system,then once the leaves develop (In deciduous trees) by capillary action from the leaves as they evaporate water during the respiration process.
The actual wood inside the cambium layer is skeletal structure and technically is no longer living material. This is why hollow trees can exist and continue growing despite losing much of their bulk. As long as the cambium remains intact and there is enough "scaffold" for it to grow on, it will survive.
Time flies like an arrow; vinegar flies like an uncovered wine must.