(The question is double posted; so I'll give a doubled answer.)
Vacuum sander. You don't even need to wear a dust mask.
A simple one like this one works fine:
http://www.acehardware.com/sm-fibatape-and-reg-vacuum-drywall-sander-sv303u--pi-1289091.html
You need to clean the vacuum filter very regularly, with any extended use, but it is so much better -- and faster -- than sealing off the repair area and cleaning up the dust afterward.
You also should need very little sanding if you've applied multiple coats of drywall mud and feathered it out properly with a wide trowel.