Carving wood with a small carving knife allows the artist to have complete control of his artistry. In fact, very few other elements allow a wood carver to have more control over how a design looks and where the carves take place. A carving knife allows the user to make small knicks or large dents. The final product all depends on what you want the design to look like, how you place your hands and how hard the wood is.
Smooth the wood with the sandpaper. This will get rid of any excess pieces of splinter and small flaws in the wood. Don't smooth it down too much. Do it just enough to where it is easy to handle.
Draw your design on the piece of wood. This step is optional if you know exactly what you're carving or if you're positive you don't need to do this. However, many people do draw their sketch on the wood before they carve so they can see precisely where they're going.
Begin carving the design into the wood. Trace over the design with the knife. Make a semi-deep impression, so you can see where you're carving. Do this slowly and move the knife away from you. Keep your hands as far away from the blade as possible, so that if the knife slips you won't injure yourself.
Detail the outline. Once you've finished carving the outline, you can now begin to put finer marks inside of it. It is ideal to have traced these details. But if you didn't, then you'll have to do the details freehand.
Smooth out the wood again when you've finished carving. Carving wood can create small splinters and imperfections from the blade. Smooth it down again with the sandpaper so that the wood is easy to run your hand over without getting cut or pricked. This will add the final touches to your final piece.