For many tasks you may not gain much benefit from going above 4-500 grit but polishing your axe to 0.33 micron certainly won’t affect edge retention. For finishing work, you certainly do want as well polished of an edge as possible since that means less scraping or sanding. A well honed plane can leave a surface that’s actually too smooth for painting.
If you'd like to learn more about the differences between hardwood species, I can think of no better resource than R. Bruce Hoadley's 1980 masterpiece, Understanding Wood: A Craftsman's Guide to Wood Technology. Not only does Hoadley detail nearly every species used for woodworking, he does an exceptional job at describing how to prepare, work with and finish these hardwoods. This is an industry-standard resource, one that I'd highly recommend to every woodworker. 

After years of digging down under router tables, lifting the entire unit up to change bits, and then fighting to get the plate flush again in the table, I chose to spend the money to pur­chase a router table, fence, and lift system. I did a thorough review of these systems, and chose the Canadian made Jessem Rout-R-Lift II kit. The system comes with a solid steel stand, a phenolic table, an adjustable extruded aluminum fence, and their base model lift system. For budget reasons, I did not choose the hefty Mast-R-Lift, but I am quite happy with the lighter Rout-R-Lift II. It will last me a couple of lifetimes, so it is the right system at the right price for me in my one-man shop. Hats off to Jessem for making a great lift at a very rea­sonable price in the middle of a tough economy. The table is durable, and flat. The direct drive lift is smooth and precise. I mated the lift system to a mid-sized model 690 Porter Cable router, which has a fixed speed, and enough power to do any­thing I need. The Jessem system uses a bayonet type mount for the table inserts, a nice touch that makes swapping the table insert quick and simple. As with all my machines, the router table is connected with the supplied dust port to my shop dust collection system with automated switching. 
All you need to get an edge on your hand tools and pocket knives is a 100/300 grit combo stone from your local hardware, even horrible fright. This shouldn't cost more than $10. Then go to the natural slate section of the home center or flooring store & find 3-4" natural slate tile that you can barely see the grains in. This should cost another $1 or so. This tile is roughly 800 grit. If you can't find natural tile in your area, you should be able to find an 'Arkansas' stone for <$5. If you can scare up some Chrome Oxide and a piece of leather (piece of cardboard or block of MDF also work) all the better. These three things will cost you $15 and get your edged tools sharp enough to take hair off your arm and chips of your lumber.
Every woodworker needs a couple of levels. You probably won’t need one of the 6-foot levels used in construction, but 48” is a good length for many of the woodworking projects you’ll do. Usually, you’ll also need an 8” level too, usually known as a torpedo level. You’ll check the level and plum of your construction. Level means horizontal, and plumb is vertical.
I set an initial budget of $10,000 to build the shop – everything from studs and drywall to hand tools and machinery. The final number was over by $1,000, but I’m still very happy with the result. The shop is now my haven, with a good sound sys­tem and good lighting. Every time I go back into the shop, it is exactly the way I left it, because it is my shop!
That's it. That's all you really need to begin woodworking. Over time you will add more tools to your collection, like chisels, drill bits, a sander and, more clamps; but for right now you should be able to get started on most beginner projects. Don't be afraid to look online for second- hand tools. Old drills and circular saws work well when given proper care. With some ingenuity you can figure out how to adapt most plans to the tools you have available. People have been making wooden items throughout human history, and they didn't need expensive planers, biscuit joiners or fancy jigs. Start learning the craft, see if you like it, and have fun.

Every woodworker needs a couple of levels. You probably won’t need one of the 6-foot levels used in construction, but 48” is a good length for many of the woodworking projects you’ll do. Usually, you’ll also need an 8” level too, usually known as a torpedo level. You’ll check the level and plum of your construction. Level means horizontal, and plumb is vertical.

This is known as the “Scary Sharp” method and I first learned of it on Usenet back in the day. I’ve had pretty good luck only going up to 2000 grit automotive paper. That stuff is commonly available near the spraypaint at Wally-world. At this grit, I can easily shave the hair on my forearm. For a plate, I use a single 12×12 tile from a Big Box store.

Hand tools offer your best chance of finding a real bargain. Until the early 20th century, nearly all woodworking was done with hand tools, and their designs and uses have changed little. Most of the high-end planes on today’s market, for example, are just reproductions of the original designs. And because the originals were mass-produced, they are fairly easy to find at rummage sales and antiques stores. (For more information, refer to Matthew Teague’s article, “Buying Old Tools,” in FWW #180).
I find, as others have noted, that braces are pretty easy to find, and bits for them in decent condition harder. I too tend to buy them whenever I see them. There are a number of varieties of brace, and some meaningful differences in them. Pay attention to the design of the chuck, and to whether the brace is ratcheting, or not. They're all good, but some differences in best application.
This style of saw will provide more power than a contractor-type saw and have the high-quality rip fence you need to do good work. However, because they are favored by professionals and serious amateurs, cabinet saws are harder to find on the used market. Scour the classifieds and online sales (be sure to check industrial auction sites as well), and do some networking. Check the bulletin board at your hardwood supplier and ask the proprietors if they know of anyone selling a saw. Also call local cabinet shops. They sometimes have a surplus tool sitting idle that they’d be willing to sell. Take your time in this step. A careful investment will pay dividends in the long run, but a well-intentioned compromise can cause long-term frustration.
A personal favorite of Chris’s, this wood is the ideal choice for woodworking pieces that want to showcase beautiful grain and an excellent finish. The naturally wavy grain of Black Walnut creates a look that is artistic and abstract, with a density that also gives weight and strength to the piece. Black Walnut stains wonderfully, but is almost best when the natural elements are emphasized with an oil finish only – and it should never, ever, be painted!

Use the square and position the pivot point onto the board top and slide the square up to the 5 on the line up “COMMON TOP CUT” outside the board. Mark the line as for the angle. After first angle is cut, measure the rafter length from the tip cut to get the seat cut measurement. Mark the seat cut and place the pivot point onto this mark and do the same step to get 5/12 angle. From that angle, measure up 2 ½” and make the line.
​There are some diverging paths that you could take at this point: some may want to get a router with a router table for edge work and improved joinery capabilities, some may want to start looking at some of the interesting 3rd party jigs - two of my favorites are the DowelMax and the Kreg Pocket System, but my recommendation would be to equip yourself to buy cheap stock.
The best advise I can give you is to get and read the book "Hand Tool Essentials" by the staff of Popular Woodworking before buying any tools.  It is sort of an inexpensive crash course in hand tools.  Chris Schwarz's book "The Anachrist's Toolchest" is another good source of information on handtools that I found to be a fun read.  Use the internet to learn all you can about a tool before buying.  The tools you need are dictated by what you want to build.