Wood siding is commonly cleaned using a pressure washer before repainting or restaining. Using a pressure washer strips away most original paint, which helps when you're ready to strip the paint or stain completely before sanding and patching the damage. A pressure washer spraying water at 1,500 to 2,000 psi is strong enough to clean and strip the wood without causing damage. Once the wood is clean, it should be allowed to air-dry.
Although power washing the siding will strip much of the paint, some will remain. All residual paint should be tackled with basic sandpaper and a paint scraper. Sandpaper that is 100 grit works well for stripping paint and other finishes while leaving a relatively smooth surface. A second pass with finer-grade sandpaper -- 220 grit or so -- will leave a much smoother surface, which will be reflected in the finish. The fine-grade sandpaper should be the last tool used once the paint or stain is completely stripped.
Although regular Bondo can be used to patch wood surfaces, the waterproof formula is better for wood siding. You can waterproof the exterior surface of Bondo, but the surface that comes in direct contact the wood is susceptible to water absorption, which can make the Bondo swell and warp. Wood absorbs moisture from air, and the moisture may get wicked into the Bondo. Waterproof Bondo will not absorb water and is the better choice for patching exterior wood surfaces..
If you've ever worked with wood putty, then using Bondo should be fairly straightforward. The major difference is that wood putty simply can be scooped and spread, but Bondo is composed of two components that have to be mixed. Once mixed, the Bondo is spread over the damage with a putty knife then allowed to harden. Once hardened, Bondo is sanded down until it is flush with the wood. After you've made all the repairs, you can prime and paint the wood siding.