Sanding wood is a process that, if done correctly, makes the wood surface very smooth by "machining" the surface of the wood with a multitude of very small sharp edges; in other words, sanding is the process of removing surface imperfections, including scratches, from a surface and thereby making the surface smooth.

Beetles are indeed a serious problem, mainly because they spend most of their life tunneling inside the wood, making the wood very weak. Of course, the holes they make to the outside are not very pretty.