What is the best product to apply to uneven and filled wood beams to get a natural wood finish?

I have stripped thick black paint from interior beams to find that the wood underneath has old woodworm holes and large areas that have been filled. I am finding that some wood is flaking away as I sand them. I do not want to cover them in paint again but think they need more than a wood stain to seal them. Would a satin varnish be suitable? It is not a supporting wall so hoping that I do not need to replace the wood as I am trying to keep the cost down.