(I am not a pro but I’ve had good results as a DIYer) 800 grit, wet, is a good finishing grade imo. Wire brush or chemical stripper or a mix of the two is the best diy way to clean out holes and welds etc. You want to be as thorough as you possibly can as the paint will almost always look different if it’s on old paint instead of metal- but, you can get away with it more in welds and other uneven bits of bike, because it’ll look different anyway.
As far as your masking goes, personally I’d spray the smaller part first unless it’s really small- it’ll normally be an easier masking job to cover up the small area than the large. Fine line masking tape is much better than normal masking tape for edges especially if you’re going round corners etc as it gives a better line, easier to shape too and less likely to suffer bleed from a bad mask. The main downside, is that if you end up with a raised line after your clearcoat, it feels a bit weird if your stripe is recessed rather than proud.
What paint are you using? You’ve taken on a pretty complicated job, I totally approve- here’s the first thing I ever sprayed:
Not perfect but it worked alright. Pushbikes are a pain in teh arse with all the curves and awkward corners, just be super patient and don’t overdo the spray as there’s nothing worse than a run in an otherwise perfect job.