From a repair point of view, finishes generally come in two categories. The first is a nitrocellulose lacquer (or shellac style) with which new finish can be melted with solvent and blended in sometimes seamlessly. The second is a urethane (or polyester style), which will not melt or change with solvents.
To find out what finish you have, find an inconspicuous spot of finish—such as under the control plate, pickguard, or tuning machine—take a Q-tip dipped in lacquer thinner and wipe it a little. If the finish softens or melts, you have lacquer.
Let’s say your beautiful old lacquer-finished guitar has a nick in the finish, and there is a small chip where the color is missing, and you want to fix it. Here is a color trick: I keep lacquer retarder around the shop—it is like thinner that evaporates much more slowly. You can put a few drops of retarder on the area, and as the finish melts, you can take a toothpick or X-Acto knife and move the color to cover the chipped area. Once it sets, slowly build up some clear until it is over the height of the surrounding area.
A great trick to bring any finish down to level is to wrap both ends of a single-edge razor blade with thin tape leaving the width of the finish you are trying to level uncovered. Then, scrape the finish down as far as you can go until the tape hits the body. The thin leftover area can be sanded easily.
A lot of people say the greatest finish for tone and beauty is a thin nitro-lacquer finish. However, a thin, well-applied urethane can come very close, and it may be indistinguishable to the untrained eye. A friend of mine had his ’80s Gibson ES-335 refinished in black urethane. He loved the guitar until he got a beautiful new custom guitar finished in thin black lacquer. So he stripped the urethane finish, and had the same builder put on a matching black lacquer finish. It is rare to have an immediate A/B like this, but as so many people ask me the difference between lacquer and urethane, here is the quote from the owner:
“A killer guitar is a killer guitar, but a super-thin, almost nonexistent finish allows the wood to vibrate more, and I felt that I got more insane overtones and beautiful harmonics that swell into sweet feedback after the refinish.”