Right you are Eliot Ness, I’ve heard it used that way too. It’s kind of strange when you think about it. Smoothing out OP doesn’t actually change the color, just the texture. And you’re not sanding on color either, it’s clear. But like I said, the terms have become sort of interchangeable. I forgot to mention that the term “block sanding� is also commonly used (and casually interchanged).
And speaking of changing the texture, many paints (and painters) don’t leave a smooth finish after spraying. In that case you need to sand them out to get any kind of gloss at all. Remember the phrase "x coats of hand rubbed lacquer"? Back then you needed to sand and rub (compound) lacquers because they had an almost matt finish when they dried.
You’re also right that the OP should be in the clear coat. I was looking at an A6 the other day that had been repaired. The painter messed up the base coat really bad and it was almost more like a sandpaper texture than OP. The texture was so rough there was no way anybody would ever get gloss out of it.
PC.