Wet sanding is usually done to save sandpaper, keep dust down and (maybe??) get a little smoother finish.

I do not know what the advantage might be to wet sanding the dry wood. As a matter of fact, it might pop some strips if you have not used epoxy for glueing up.

Usually it is used to sand epoxy and varnish. Water helps get off the amine blush.

The way it is usually done is that you use regular sandpaper and either use a hose set at a trickle. I use a bucket of water and dip a rag in it and sand with one hand and squeeze the water out slowly with the other.

It is not something necessary but it does keep the dust down considerably in your shop.