To "wet sand" you use the black carborundum wet or dry sandpaper available at auto parts and hardware stores. Use plenty of water when sanding to keep the paper from clogging.
To "rub out" means to use red, course, or white, fine, polishing compound found at auto parts stores. If you go through all the grits of sandpaper mentioned above use a dab of white on a soft cloth and rub it in a circular pattern to finely polish the paint out. Finish it out with a coat of wax.