What is the best way to fix major dents and holes in plaster or drywall?
The answer depends on whether the patch has to withstand continued abuse or simply come out flat and smooth for painting. When you need to protect high-impact areas, like the lower part of a wall, I would use a hard filler like good old-fashioned Polyfillatm. Hard filler will sag under its own weight, so for large holes make it as thick as is workable and in small quantities. Moisten the area slightly for better adhesion. I prefer to avoid sanding a hard filler precisely because it is so hard and durable, so I always apply it flush or less, never over the top. If need be, apply several coats until it is almost flush although not quite smooth. Once it has set, which is pretty quick, apply a thin, pre-mixed finishing compound that is easy to feather and sand smooth. For patches where continued abuse is not a problem, a new breed of lighter plaster repair products on the market can make life even easier. Pre-mixed, lightweight, and very stiff, they will not sag or shrink. These compounds can be used outdoors or in the bathroom, where moisture poses a problem with most plasters. When applying, smooth them out with a spatula to avoid most of the sanding.