Attach a piece of 220-grit sandpaper to the bottom of an electric sander. Run the sander across all the dinged or dented parts of the paneling.
Wet a cloth with warm water. Gently place the cloth over the bottom of a hot iron. Run the iron and cloth over all the damaged parts of the wood paneling. This will raise the wood fibers to the levels of the surrounding wood.
Remove the iron from the paneling and sand all the damaged parts with 220-grit sandpaper and an electric sander. Wipe down the damaged areas with a tack cloth to remove all the dust from sanding.
Apply a wax crayon to small nicks and chips in the paneling, in a color that matches exactly. For large dents and dings, scoop out a small wad of wood putty with a putty knife and swab it flat against the damaged areas. Use the side of the putty knife to flatten the putty. Allow the putty to dry overnight.
Sand the area down in line with the rest of the wood, using 220-grit sandpaper so that it's in line with the surrounding paneling. Dip a 1-inch nylon brush in the finish, be it paint, varnish or another material, that matches the rest of the paneling. Paint over the repaired areas.