Dull tools such as chisels, blades, planes, scrapers and gouges don’t cut cleanly. They tear at the wood fibers resulting in a fuzzy, uneven, unprofessional look. Tools that have been chipped or nicked require grinding. A bench grinder, wet grinder, or even a belt sander can be used. Avoid letting your tool get too hot when using a bench grinder or belt sander to prevent it from losing temper. Dipping it in a pan of cool water every few seconds will help. After grinding, proceed to honing using either a flat wet stone or oil stone. A wet stone is preferred when doing fine woodworking.
http://www.youtube.com/watch?v=N8LMPzjtnMA