How should I prepare a plywood subfloor for vinyl sheet flooring?
Vinyl isn't very thick, and it is quite plastic.  This means that over time, it will conform to the shape of the floor beneath.  This means that you will see grooves in the vinyl where there are gaps between the plywood sheets.

This means you want the sub-floor to be as smooth as possible.  BUT!!!! you need gaps between the sheets to allow for expansion or else you risk having the sub-floor develop a slight buckle.

Here's what I would do under ideal circumstances:


Spend some time screwing down the existing floor to the joists.  This is likely the only opportunity you will have to do so.
Get some 1/8" Hardboard, Lauan or birch plywood (one side smooth) and lay it down without gaps over the sub floor.  At this thickness, you can staple it down.
smooth any edges/fill any gaps.
Lay your vinyl.


However, you need to make the call as to the quality of the existing floor the level of imperfection you are willing to tolerate.  It may not be worth the extra expense and labour to do it this way.  In which case, I would fill the worst gaps, sand down the worst edges, and lay down the vinyl.