I have been using mainly Poly on all my guitars due to drying times and the temps you can apply them. I use water based due to lack of odour but if you put it on bare wood then it can raise the grain so I put on a solvent wipe on poly first, maybe 2 coats but most time I get by with a single coat, and then finish off with water based over the top.

You can wet sand with other substances than just water. I have used Shellite near holes or cut outs but you have to be a bit mindful of your surroundings. Make sure there is no naked flames or other ignition points and do it outside as the fumes can get a little bit overwhelming and wear the appropriate mask with the correct replacement cartridges.

As for the back of a neck I use the fine white Scotchbrites as they are equivalent to 1500 and leave a satin finish that my hand doesn't stick to after getting sweaty.