The grit of your sandpaper is identified by a number on the label. The higher the number, the finer the grit. For example, 60-grit is coarse enough to make you cringe, but it does a good job cutting through heavy finishes. Feels about like a 5 o'clock shadow.
220 is the finest. This is the stuff you use for your final buffing out. It does the job just right on hardwood floors.
To check for quality, pick up a sheet of new paper and bend it. If you make it more than half way without the granules separating and hitting the floor, then you have a good quality paper.
If it's wood that you're working on, my personal choice is garnet paper. Garnet is what the grit is made of. On wood it doesn't leave as many marks.
If you need to sand down a metal surface, your best bet is emery cloth because of its backing. Metal can cut right through a normal paper backing. Your paper will last longer with a cloth backing.
There's even black paper and screens for smoothing out drywall. And something that's gaining popularity is fancy-colored sandpaper. It gets rid of paint but doesn't clog.
One more tip: if you're working on molding or doing contour work, try one of these sanding sponges. They do a nice job smoothing out already finished surfaces without leaving grit marks.
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