Wet sanding involves using a lubricant and 'Wet/Dry' sandpaper to smooth out a finish... typically between coats. I use 600 grit with warm, soapy water, sanding in little circles, almost a buffing motion. Dry with a towel and let it air dry between coats... Start with 600 grit and gradually increase in fine-ness (?) through 800 and 1000... I also like the very fine ScotchBrite pads...
It's been awhile, but I usually sand every other coat to let the finish build up... After it is sufficiently thick, I'll go to every coat... I'm sure that others will be along shortly to properly instruct you
-robert