I am extremely happy with the new update to crafting. Here is what I have figured out:
Mud runes: Water and earth
Lava: Fire and Water
Dust: Earth and Air
Steam: Water and Air
Ok, say you want to make dust runes, and you want to go to the earth alter. Bring an earth tally (obviously), an air tally, rune essence, and air runes (the same amount as rune essence). Use the Air tally with the alter. you will lose the air tally. It is random how many runes you will get.
The good part about this, the main reason I like it is because it saves inventory space: Lava runes can substitute as Earth or fire runes. Therefore, you can have 20 lava runes and be able to use them as either fire or earth runes.