2 of 2 edited body

If you are asking, where they got all the resources for their ships, you are right to raise this question, because the Iron Islands couldn't possibly provide enough wood for all the ships, the iron fleet would need over the centuries. We know from real world history, that every seafaring culture, like the Vikings or the Romans "consumed" almost all their forests and they had far more land.

However, consider this: If you look on the map, the Iron Islands are located in a huge bay. The surrounding land seems to be covered with thick forests and are probably not very populated in some parts. And the distance doesn't seem to be too far to cross. So I guess, they could have just traveled to the shore with a bunch of ships fully loaded with men, then quickly harvested some of the woods and built lots of ships.

The Greyjoy ships I have seen so far seemed to be quite simple and could probably be maneuvered by 1/10th of the men the ships could carry, taking into account that the Greyjoys are very skilled sailors.

So they could have went to a lesser populated part of the continent with about 100 ships, quickly steal some of the wood and build an armada ten times larger.

Its neither mentioned in the books, nor in the series, so it's up to your imagination, but maybe my explanation makes sense?