Is it to be painted or do you want something like a furniture quality. I have fixed holes in window sills with bondo type automotive filler when I knew it was to be painted. I have even used drywall screws and put them in at angle below flush kind of like rebar and then filled with auto filler.
Wood fillers won't work on a huge hole as well.
The idea of a wood inset is also good if you have the skills.
After filling the wood will be sanded, primed and painted with oil based exterior paint. I am repurposing an old short wooden yard light post with wooded base. The hole is in the square plank base. Thanks for your help.
I posted a tip the other day if you use the bondo product. get a couple of the throwaway cards from the gas station and use them for mixing it on a board and also applying it to the wood. best tool around and throw away when done.
Not sure about anyone else but I have used a product named Famowood. It comes in many colors but that doesn't matter in this case. There is zero shrinkage once dried. Sanding & painting or staining is fine.