Aside from flying and building planes, I build furniture for fun. Although most furniture is made of much harder wood than balsa, the methods for sanding are very very similar. Coarse grits will shape and remove material very fast. I would not recommend using a palm sander on balsa. I fear that it will remove too much material, way too fast.
- Start with a coarse grit, work your way to finer grits. The finer the grit, the less material is removed.
- For large flat expanses, use a sanding block.
- Never go against the grain.
- Typically, I use my hand when sanding, I like the feel I get from working the wood. It allows me a more personal connection with the wood. But that is a
developed sensation.
- A sanding sealant works wonders if you want to leave a glass like surface to work with. These are commercially available.
- Between grits, wipe your surface with a tack cloth (usually cheese cloth with a sticky substance applied to it, available in the paint section of your local
hardware store), or a damp, NOT WET, cloth. This will help to remove dust. A damp cloth will raise the grain a bit, but if you
leave it sit, you can still achieve a nice surface.
- Do your sanding after your aircraft is near or in final assembly. This will allow you to make sure all your mated surfaces get sanded together and you don't
end up with erratic edges.
- Good ventilation is always a plus.

Hope this helps a bit.