And you seem to be using a very mixed application method. Normally you'd either use poly as it is (ideally spraying it) or mixing it 50/50 with turps to make a thin mixture you can wipe-on from the start rather than spray (or brush). Wiping-on from the start will probably get you the smoothest finish if you can't spray it on.

It's not TruOil, so you can't wipe-on un-thinned poly in the same way to start with and hope to get the same results.

Ultimately you just want to get enough of a finish coat on so that its deep enough to sand flat without sanding through to the wood and stain below. How deed it needs to be depends on how flat you can get the surface. Some people do it via very careful preparation of the surface and then applying the finish coats very evenly, so that only a few coats are required and little sanding is needed before polishing. Others take time to build up many thin layers. Others put a few thick layers on. A rough thick coat may take longer to sand flat, but it often takes less overall time than applying lots of layers.

Many ways to skin a cat, many ways to finish a guitar and end up with a similar end result. A lot depends on your level of expertise in the different finishing methods and the amount of time you have available. But it helps to understand just what you are trying to achieve. Some of the intermediate steps people take don't seem to make much sense to me, but if they are happy doing it that way it won't do any damage, though it might extend the process a bit.

To get TruOil or Poly to fill up undulations in the finish, rather than just form another layer that follows the contours (due to surface tension), you need to thin the finish significantly. And I'm never quite sure how well a very thinned finish would dry and adhere to the surface below. Obviously the more thinners there are, the thinner the final finish will be, so the more applications you need. A few thick layers and sanding back can end up taking far less time, even if the intermediate steps don't look as nice.