As others have said...

Use dry sanding on bare wood - for instance, after setting and gluing all the strips first scrape and then dry sand them with 80 and maybe 100 or 120 to fair them and prepare for epoxy.

After glassing and applying a couple of fill coats of epoxy then you need to smooth out the fill coats. A random orbit sander with 120 grit works great here - if you can find wet sanding paper for your RO sander then go for it - I couldn't so I dry sanded here too. An attachment from sander to vacuum cleaner helps keep the epoxy dust down - I really good respirator is mandatory (my wife got me a Racal power visor that covers your whole face and blows fresh filtered air on you that is very nice). Do NOT take chances breathing the epoxy dust - and wear long sleeves and pants too - it isn't worth the risk.

Once you have that first smooth surface then when you apply later coats of epoxy or varnish you can wetsand with 120 and/or 240 in between. Get a rubber sanding block from an automotive store and just plunge it in a bowl of water, sand till it starts to get pasty, and plunge into water again. Rinse and wipe down whole boat when done. Wet sanding is dustless so you don't need the mask. I do wear rubber gloves since who knows what the epoxy does for your skin. It really cuts nice and a piece of sandpaper lasts a long time.

Be sure to get wet/dry sandpaper (usually black or silver grey) since I found out the hard way that regular sand paper loses its abrasive after about thirty seconds in water (even less time on a power RO sander).

Finally, after the final coat of varnish you can buff it out with a buffing compound like 3M's Finesse-It on your RO sander (or buffer if you have one) for a mirror smooth finish.

Best tools I bought for kayak building were a block plane to shape strips and a Bosch 3725DVS 5" random orbit sander (do not buy a cheaper immitation!)