Here's a pretty good DIY guide:

How to Polish Your Headlights Like a Pro - Popular Mechanics

The Meguiars kit starts at P500 then P800, P1500 and a final polish. Use your judgment on what to start with.

Remember to sand in straight lines-never circular. Don't ask how I know this. Just trust me?

I've, as I said, started with some pretty aggressive paper, but only on severe cases. Once you get a good bite into the surface, you'll see the edges of the damaged protective layer start to go away. That's what you want. Get rid of that and you're on your way to happiness.

At the end of your first grit, it should look like a perfectly uniform...milk jug. No variations in milkiness.