Thinners makes varnish easier to move about at speed with a brush. The faster you can get one coat done, the better (generally) the finish. If you must use thinners, use only a few drops on the surface to liven up the brush. However, you should be able to reduce the thickness by hard shaking before opening the tin.
Smoothness is achieved by sanding the bare wood untill it is as smooth as glass. Get to the finest grade of sandpaper (ie flourpaper) that you can find. "Warm" the paper by rubbing it against itself. The finest grades should be ok to rub on your skin. Never ever sand across the grain. Do not use power tools if a supersmooth finish is your aim.
"Turn" the grain before any varnish at all by wiping a damp cloth over bare wood and leaving to dry. The resulting roughness is what otherwise would be the roughness of the first coat of varnish. Rub down the wood again when dry. Do this at least two or three times.
With varnish, aim to get the finest smoothness with the minimum no of coats, to avoid having to have a gloopy "thick" high-shine varnish: a thinner high-shine shows off the wood better, and has less variance over the surface, catching the light more fully.
Leave at least a day between coats to allow hardening of the varnish. You should get depth of shine after five or six thin coats, but expect to do 8-10 at first, then one or two per season, rubbing down in between each coat until gloriously smooth.
Get a powerful light on the surface whilst rubbing down to see imperfections- much brighter than the light that will eventually shine on the varnish, especially so indoors.
Soak the brush in water for 24 hrs beforehand. Use a decent brush: if hairs fall out during the varnishing, you spend time getting them out instead of connecting together the brushed areas.
With the varnish, open the tin, pour some into a spare v clean tin, and close the tin. Your brush should never go in the original tin. Aim to keep the varnish to the bottom half-inch of the brush. Chose an area, speead and "lay off" with raggy ends - remember that the aim is to get varnish on there, so when the chosen area is done, leave and move on, giving time to connect in other areas without brush marks. If you see a fault don't go back - this coat won't be the last.
Aim for 15:1 ratio minimum of time preparing v varnishing - for every hour, varnish max 4mins, prep the rest. After each coat, leave the area completely.
Your life may not be long enough to varnish all areas as above: if so do the most "showing" bits - at hand height around doors, curved handrails, areas that reflect the sun outside.
Sorry, you didn't ask for all this! But it will look fabulous.
No. You should thin the first coat, but not subsequent ones if you can avoid it.
If you use conventional varnish straight out of an open can, by the time you get to the top coat it will have thickened, so thinners will be necessary. But you won't get such a good finish if this happens. The answer is to pour out the required amount for each coat, and reseal the can asap.
The best varnishing I have ever seen was on a large motor yacht in Mallorca, on which my son was engineer. It was done by a Japanese crew member who has something of a reputation as an expert in the yachting industry there. His work was superb, not a flaw and just like a mirror, so much so that it was difficult to believe that it had been done by hand. According to my son, he always thinned varnish to a similar viscosity, dependent upon temperature. No special brushes, but often cleaned. Varnish always strained. Never applied varnish after about mid-day.