Don't Sand Through the Stain
When sanding between coats, it's easy to rub right through the clear coat, removing the stain below. So sand super lightly after the first coat, just enough to cut down any dust whiskers on the surface. If there are bigger problems—such as runs—deal with them after the second coat when you can sand a bit harder. To repair rubbed-through spots, just apply new stain. Immediately wipe away any stain that gets on the surrounding polyurethane.
Sand Curves With a Pad
When sanding between coats, smooth curves with a steel wool substitute such as 3M's Scotchbrite pads. Steel wool leaves fibers behind, which can cause stains in the finish.
Sand Fine Surfaces With Wet/Dry Sandpaper
Lightly sand between coats with 400-grit wet/dry sandpaper, which won't fall apart when it gets wet. A little water provides lubrication and keeps the finish from clogging the paper. Sanding after each coat (except the last) rubs out imperfections and roughens the surface for better adhesion of the next coat. In most cases, this is a quick job, more like wiping the surface than sanding it. When the sanding is done, wipe away the residue with a damp rag.