To place the object you need first to create a pool big enough to fit the Mill inside, then place the Mill. You can hide the edges of the pool with some grass or stones to make it more appealing and realistic.
PRO Tip: If you want to simulate water movement place a few spraying water emitters in the pool (note that you'll need to enable bb.moveobjects on).
To find it in-game, search for ' Functional Watermill', it's located under Outdoor activities and it costs 750$.
To make it animated I used the windcatcher that came with Backyard Stuff Pack, therefore this pack is required, and to be able to collect Flour you also need Cottage Living EP.

The Cottage Mill used in the screenshot was downloaded from the gallery, the creator is rippleffects

REQUIRED: Backyard SP, Cottage Living EP

Credits: Sims 4 Studio, Blender, Substance Painter

• Recoloring Allowed: See TOU on my profile page