Ooh what a lovely project, perfect for the long winter evenings.
When my husband retired I bought him a dolls house kit to build for our eldest granddaughter. That was 15 years ago and he still hasn't finished it! It had to be dismantled and packed away when we moved and has stayed in boxes ever since I have built the kitchen and bathroom for it and various items of furniture which I hope have survived storage, maybe one day they'll get into the house.
It's a very addictive pastime once you get started. It can also be expensive, especially if you buy scaled materials etc from specialist shops. A lot will depend on how authentic you want to be re period, scale, finish etc. As others have said a lot of accessories and decor materials are downloadable and printable. Do lots of research regarding adhesives etc as some may be cheaper and work initially but then deteriorate after a few years later and spoil all your hard work. Making your own furniture is great fun and you'll find yourself viewing everyday objects and waste materials in a whole new way!
Tools.....? Think small. Dental tools, bent nose tweezers, sharp pointed scissors, a good ruler, a 1/12th scale ruler (if your house is that scale), clothes pegs or quilting grips can be good for holding things together while glue dries, a scalpel holder and blades, they're sharper than a craft knife, a small hand drill which will fit into the rooms and tiny drill bits, especially if you're installing lighting. Necessity is the mother of invention!
Are you thinking of creating an historical period house, or something more modern? Whatever you do have FUN doing it, and don't forget to show us your work