3m sandpaper

i bought some 3m sandpaper. It is for "finishing" and says its 320 grit....but its fine grade. Are 3m measurements messed up, or am I just not used to seeing ultra fine sandpaper. It does feel fine, by the way. And am i supposed to sand in the long direction of the car? or in circles

this is not going to be the first time that you have been refered to the FAQ.
you don't even have to do a search as it's all laid out there for you to read.

http://www.automotiveforums.com/vbulletin/showthread.php?s=&postid=547069&t=9066#post547069
http://www.automotiveforums.com/vbulletin/t14192.html

here's a very handy hint for the future.
if it says:
Important: AF Car Modeling Frequently Asked Questions [FAQ] - * Look here first! * ver2.0
it might be worth having a look there first, especially if it is to do how-to's or similar.

i bought some 3m sandpaper. It is for "finishing" and says its 320 grit....but its fine grade. Are 3m measurements messed up, or am I just not used to seeing ultra fine sandpaper.
Since you have already bought it then I would say just test it on some scrap sprue or some part of the model that would not be seen once assembled. I'm guessing that it is finishing paper meant for WOOD. 320 can give a nice finish on wood but I usually go up to 800 on painted wood. But like I said, test it.

The rest of your question can be answered by reading the posts Drunken Monkey linked.

320 is considered rough for what we use it for. 1000-2000 would be considered fine.

you could use 320 for cleaning up mold lines and fixing up rough molding or even smoothing out putty, but you will have to follow up with at least 600 at the minimum. finer would be even better.

320 is a "finishing" grade if we talk about automotive paints and clear top coats, as later you're going to use something like this:

http://www.navalchicolino.com/images/WK400590.jpg

For models, 320 is very rough. 1500 or 2000 should be your last stage before polishing, unless you use micromesh.

320 is a "finishing" grade if we talk about automotive paints and clear top coats, as later you're going to use something like this:
.

I have never in my days used 320 to cut paint on a car. The lowest I go is 600 and thats if there are fish eyes or some really bad orange peel. 320 on paint on a model would be hell.