One of the responses on the hot rod forum suggested smoothing the metal's edges to avoid getting cut. But beyond that, you want to smooth those edges to improve the paint job.
Paint won't stick well to sharp edges and burrs. You'll get much poorer adhesion and film build. It will never look its best and will be the first place that the finish will fail.
As for machine sanding verses hand, you want to use machines as much as possible. Machines are far more consistent than human hand can ever possibly be. There will always be nooks and crannies where you simply can't use a machine. But everywhere else, the machine will give you best quality finish when used with an emphasis on skill and precision.
For hose tight spaces, you can use foam and rubber sanding blocks to avoid the inconsistent pressure of your fingers. They can also be cut and sculpted to match the specific contours of your project.
The abrasive themselves also come foam-backed to improve contour sanding. Meguiar's, 3M, Mirka, Norton and others all make foam-backed abrasives.