Sandpaper:
That depends on the phase your at.
if you still doing bondo and shaping use a low grit, we use 60grit, then 120, and then 240.
Dont focus in one spot too long, as this is called finger f*#%&ng
If your at a phase that you are happy with the bondo shape and detail then use a higher grits, starting with 600, 800 and then a primer coat, with a guide coat and do what is called "feathering out".
Guide Coat
A guide coat is where you do a coat of primer (normally grey), then with a different colour (normally black) you do a dust coat holding the can/spraygun furrher away.
Then wet sand it with 1000-1200 to find your high and low spots. this is
Feathering out
DO NOT sand back down to bondo, once you see that the guide coat is being sanded back you know that you can stop.
Low spots will still have guide coat in them, and this is good as it outlines area's that you want to fix up.
if you have any major noticable low spots or pinholes use knifing putty to fix (Knifing putty is like premixed bondo in a can) or you can use a small skim of bondo
Rinse and repeat until you are happy, that you have a smooth even surface that feels and looks even.
after that do your final primer coat.
You can do a further wet sand with 1800+ if you really want, which is called "de-nibbing" but for primer, I wouldnt bother, and there is very little point.
Save de-nibbing for your top colour coats, it takes out the minor dust specks.
Tips:
Use a little bit of dish washing liquid with warm water for your wetsanding bucket.
Your fingertips are more sensative that you may realize, you can pick up imperfections in your wet sand phase by running your fingers over area's.
Added bonus:
Now you can go fix dents in cars too
hehehehe
except dont use low grit sandpaper on your car panels lol