Sanding and Priming
Sanding down the walls is the final step to prepare them for priming. You also sand ceilings if you've put a "skim coat" on them. This will smooth down any last little ridges you may have.
Sanding is very dusty work so use particle masks. And use plastic to seal off doorways or vents that lead to other parts of the house.
Pole sanders are good for reaching up to ceilings and walls. Poles with swivels on the ends make them easy to maneuver almost anywhere.
If you use sandpaper, use 120 to 150 grit. Open screens probably work better because the dust doesn't build up in the grit, like it does with sandpaper, it falls out of the screen.
If your mud is pretty smooth already, you might want to try wet-sanding with a sponge. You need a dense sponge that's been wrung out pretty well. Rub it over the joints, smoothing them out. This method eliminates the huge mess you get with dry sanding.
Clean the sponge out frequently. This method doesn't scrape up the bare paper, and doesn't raise a lot of dust.
Cleaning up is a significant part of drywall work. You'll need to vacuum up the dust several times as it gets in the smallest cracks.
You may notice that once you sand the joints smooth, they have a harder and glossier texture than the drywall, which is softer and more papery to the touch.
A good primer/sealer will help hide these differences and any imperfections on your walls. It'll also serve as a good under-coating for your finish paint so it won't absorb into some areas more than others.
If you're just going to be painting over the primer, you can use a primer specifically for finish paints. If you plan on wallpaper, use a primer with "sizing" in it. Sizing will help the wallpaper adhere to the wall and also make removing the wallpaper a lot easier.
You can also put sizing on the walls separately when you do decide to wallpaper.