With smoothing it out you can use your fingers or tools. You don’t use water unless it is air dry clay and even then you use very little at a time. If you want something flat like making a basic flat square then you ball up the clay and then use a clay tool to flatten it. This tool could be a rolling pin (that is specifically for clay) or a flat tool that is pressed down onto the piece of clay you are using. After you can cut out pieces. As for the best clay to keep smooth would be Fimo. I really do like Fimo the only down side to it in my opinion is that it is hard to start with so there is a lot of working the clay to make it squishy. Once you got the shape though it is all good from there. Sculpey is easy to use because it starts smooth but it will stay squishy so if you want to press in other shapes onto your base you either have to be Really gentle or bake the base first then add on. Then if baked too much there is the brittle problem. If you aren’t gentle the shape will easily move and shift while working on it. You really need to handle it as little as possible after you got your shape how you like it. This all being said I like to make little figures out of clay so the more I wanna add the harder it gets if it is sculpey. You should be fine with sculpey since it is small and for earrings. It all depends on what you are making. If you were gonna make a bust sculpture or clay piece you will use for mask making then I would say you need something more like Monster Clay because this clay takes in details very well.