Yeah, you want the surface to be clean before you seal it.
The buffing does a few things that are helpful. Cleaning up any excess surface stain that pooled is one of them.
Another thing is removing fuzziness from the wood. Wood is made of lots of little fibers, and when you sand the surface, you cut those fibers and mash them flat. When the wood gets wet, with, for instance, stain or varnish, the mashed-flat fibers curl back up a little. That makes the wood less smooth to the touch, and also makes it unevenly glossy to the eye. Buffing with 0000 steel wool or burnishing with wood shavings takes the curled-up fibers off again without cutting anything else and producing new fuzzies.
My sanding process usually to sand through various grits until I get the wood where I want it, then take a wet rag and lightly dampen the wood surface to raise the fuzz, then buff with steel wool, then apply finish, then buff again, then apply finish again, then buff again. You could keep going, but after two applications the wood has probably absorbed everything it's going to absorb. Then, if you're using a polyurethane sealant or something, apply that.
I don't use sealers very much, but you probably need it for a table where people are going to set drinks.
