I find the easiest way is to use a high-build sanding primer ... my preference is the
Rustoleum product. It builds up fast, very run/drip resistant, dries fast and sands very easily.
I seal any balsa with Titebond thinned with water to a "brushable" consistency. Then quickly knock down the "bumps" with 220 grit once dry (about 30 minutes or so). Be careful not to re-expose the grain by sanding too much, it doesn't take an awful lot of sanding to be "smooth enough" for the primer to take over.
Then I'll blast the whole model with a fairly heavy coat of sanding primer and let it dry for about 20 minutes. I'll take MOST of it off again with 180 grit. I stop sanding when little "bumps" of cardboard on the body tube are visible, and I can
just start seeing the grain coming through on the balsa parts.
At this point, I'll use CWP to fill any larger voids. The primer coat will really help you see these. Then I sand them smooth with 220 grit (I'll also usually go over the the whole model at this point with the 220 grit to reduce the sanding scratches).
Now, I'll spray another coat of sanding primer, let dry completely and then sand it "thin" with 220 grit. Things
should be pretty smooth at this point. If you find anything unsatisfactory, fill-spray-sand again ... repeat as many times as necessary.
If I'm just going for a "good enough" finish, I'll spray a couple coats of color coat, let it dry, apply decals and shoot the clear coat.
If I want a glassy finish, I'll spray the first color coat, let it dry (stay within the recoat time, or you may wrinkle), and then wet sand lightly with 400 grit and then 800 grit. I'll take this coat down to the point that I might see some primer peek through here and there. Then I'll shoot another color coat, let dry as above, and hit it with 800 grit and then 1000 grit.
Now, I'll apply 2 coats of my "base" color, tape off my design elements, and add a coat of my top color ... and a second if it seems necessary.
Once the paint is dry to the touch, I'll add any decals and shoot a coat of clear and
pray that I'm still in the recoat window and that nothing wrinkles. If I don't have confidence it won't wrinkle, it's best to wait AT LEAST a week before shooting the clear (far too often, I turn out to be over-confident).
If it
does wrinkle ... you either "live with it" or get out that sandpaper, order a new set of decals and go back to square one, making sure the kids aren't around to hear your choice words.
If you are shooting a multi-color design, you often get a visible difference at the tape lines due to the thickness of the upper coat. You can either resolve this by letting the paint harden
at least overnight and
lightly wet sanding with 1000 grit before adding decals and clear, or you can shoot multiple coats of clear, sanding between each coat to feather the edges. Either technique has its pluses or minuses, but you're less likely to mess up any "fine" details with the multiple clear coat approach.