Flooding the paper with mineral spirits keeps it from clogging, making it cut what feels like 10x faster. Those little "pills" that form on the paper hold the paper away from the varnish, preventing it from cutting. The wet paper seems to last forever, too. You can scuff sand an entire bookcase with a single quarter sheet of 320, and the paper still feels new. You could use stearated paper for nearly the same effect except on waterborne.
I prefer mineral spirits because it won't swell the wood if it gets through any breaks in the new finish. Won't hurt the finish provided it's dried hard overnight.
Wet sanding with 1500 or 2000 grit from your Scary-Sharp supplies puts on a nice shine after cure.