Looks like the Carpenter ants are making tunnels in the fence. I would first treat for Carpenter ants to get rid of them, then fix the fence. If you don't treat for the ants, they'll just move on to another area and destroy that part. JMO
Can provide links and additional info ? A) Wood Fillet Brand (if it still holding up) B) Dill bit grinding tool (grit, bit head size & brand) C) Sand paper grit & brand (pkg of ? Are needed)