I used a combination of chemicals and sanding to get the finish off of mine. It wasn't easy, but I like getting messy.
HOWEVER! Loads of people will tell you that you don't have to strip the finish and paint off at all. Some people just scuff the finish so the new paint will have something to stick to and then go straight to the painting phase.
If you want to strip it down, then you take it down by any of the three methods (sanding, chemicals, or heat gun). Get it down to the wood itself.
Then you seal the wood to protect it. You prime the wood to keep the grain from showing through. You paint the guitar how you want it. Then you put a
clear coat finish on it to protect the paint.
Those are the basics no matter how you look at it. If you want transparent finishes or stains then you don't prime.
But seriously, I would recommend that book. It goes through the stages of sanding and prepwork and how to tape off areas you want to protect. It shows what you need to be looking for in sanding and sealing. It shows tips for figuring out if your primer is even and how many coats to do of what.
I jumped into my project with both feet and ended up screwing it up when I got to the painting process. It was just aweful looking and I was really upset. I ended up having to strip it back down and start over. That's when I got this book... it filled in all of the little gaps for me and answered questions I didn't even know to ask.