You should hit it with a da first, to knock down the big ridges, then switch to a finer grit for hand sanding.
The main thing to watch for when sanding is for any scratches that may have been made by your putty applicator, if you aren't careful the edges will dig in and leave a scratch that you will have to fill in, you do not want to try and sand it out, you will end up with a low spot there.
Yes, when you are done it will be smooth and hard like metal, then prime and paint.