Fairing is bascially making your boat look good. It's filling in all the low spots and knocking down the high spots until you get a smooth, flat service.
It looks good but also helps protect your boat because high spots are places that will rub and wear through your epoxy/glass quicker.
How much fairing you do is a matter of taste. At the least, you should try to feather the edges of all fiberglass tape. I do this by:
1) Apply the tape and letting cure
2) Sanding down the high, rough edges. I don't spend a lot of time. Just a quick pass over with sander or scraper to get it mostly smooth.
3) apply another light, even coat of resin. When it cures, I do a light sanding to scuff of the fresh coat of resin to see where I need to do some more work.
You want to be careful you're not sanding down the fiberglass, except for the edges, because then you're weakening the boat's strength. You also want to be careful you're not using too much fairing materials because it adds weight to the boat. Lesson learned the hard way on my first boat.
If you're going to paint the boat, you could go with a fairing compound like micro balloons mixed in resin to fill in any low spots, and then sand. Micro ballons are lighter and sand easier. Be sure to apply a thin coat of resin after your final sanding over them. They are hollow and will need to be sealed.
I did the trick where I got some dark color primer in a spray can and did a flake spray on the hull. Just so I had about 30 dots per square inch all over the hull.
Then I sanded. Where there were still dots, those were low spots that needed more attention.
For a natural wood or "bright" finish, you have to rely just on using epoxy to fill in bumps. For a bright finish, you need to stain or clear coat paint the epoxy to protect against U.V.
Like I said earlier, it's a matter of personal taste. Some guys love that show-room, perfect finish. My boats are used and abused so I go for the 10-foot finish: It looks good from about 10 feet away. I don't go crazy fairing because eventually, you'll have to do some touch up work which means basically repeating the whole fairing process. Easier to do if you're not too picky.
Since it's your fisrt one and you've been talking about your next one already (hee hee hee..another boat building junky hooked for life

) I wouldn't spend a whole lot of time on it. But it's your boat so you should do it your way. Isn't that right Chuck?
Other builders: Please contribute to this thread. I don't spend a whole lot of time with fairing so please share the tricks you've used.