So after each layer of clear-coat, I am level sanding with a small plywood block backing 400-grit paper (after knocking down the runs with my razor-blade scraper). Edges that require less aggressive action get the Norton 320-grit yellow sanding sponge (which, since it is well-used, actually sands more like 600-grit paper).
The idea is to knock off the "shine" so that the next coat has some texture to bite into (unlike nitro which has a chemical bite-back and doesn't need this). In the above photo, the back of the headstock has been sanded but the neck has not.
If you look closely at the above pic, you'll see a few small recesses that are still shiny, these are areas where the grain is not yet filled in and the surrounding coat MUST be sanded down level to the bottoms of all these little low-spots. EVERY shiny dot must be removed (and the whole thing wiped clean with lacquer thinner) before shooting the next coat.
Here's another common challenge when shooting clear, namely "solvent pop". Here's a shot of the top of Jason's bass, which is cocobolo (now nicely sealed!

).
Upon close inspection, you can see very tiny white dots or "pinholes" in the finish, they are filled with the white dust left from sanding with 600-grit. These holes are generated when the solvent is trying to gas off from the finish, but is prevented by a dry skin that can form over the finish if it flashes too quickly. In this case, I was using un-thinned conversion varnish, and because I was shooting in direct sun, it skinned over *just* before the last of the solvents could get out, so they collected and formed these tiny bubbles underneath the skin.
No biggie at this stage (the dust is blasted out with compressed air and wiped off with thinner, and the next coat fills them in), since I am trying to build coat thickness to fill completely the grain in the cocobolo. With this product (Chemcraft Plastofix), I was able to shoot 3 coats in one day, with level-sanding between each coat (after 90-minute dry-time). After that, all the grain was filled!
