How to remove sheared woodscrew behind a 5mm hole?
A quick update on this question that I asked several days ago.

The way of removing a sheared screw like this is by attaching a tubular diamond drill bit (for drilling into tiles, as in the image below) to a power drill. The internal diameter of the drill bit should match the diameter of the shaft of the screw, so that it fits tightly. In this case, a 3mm internal-diameter drill bit.



If the drill is spun in reverse direction while forward pressure is applied, the diamond encrusted tip of the drill bit bites into the screw thread in counter-clockwise direction, turning the screw.

The more tightly the screw is embedded, the more forward pressure may be needed to turn it.

If the first attempt fails, and you just end up cutting away the thread, leaving just the shaft, using a smaller-diameter drill bit (just enough to bite into the outer circumference of the shaft) may work.