My friend has one and he uses a combination of chips and pellets for smoke. The chips burn fast, and the pellets burn a little longer.
You don't need a big piece of wood to get a good smoke, in fact, when it comes to making "thin blue smoke", more is NOT necessarily better.
Sweet blue smoke is almost invisible. It can be seen even when it's "invisible", but you have to get the right angle of light on it. It's very thin, and wispy, and almost invisible.
follow your nose rather than your eyes. If you smell wood smoke, leave it alone, if you do not then add a few wood chips / chunks.
Humphrey's DownEast Beast W/BBQ Guru