That looks to be mostly the remnants of the previous finish. Needs to be cleaned well, sanded, and new stain applied. Assuming you are going with semi-solid or semi-transparent.

Don't let an idiot go crazy with a power washer, please.

Someone told me Cedar can’t / should not be sanded.

is there a consensus on that?

any power washing or none ?

what staining / coating product ?

Your siding seems to be the rough kind. I would not sand that. I would however wash it all. You may be able to use a power washer, but, it must be kept low pressure. I used to clean the bottom side of our rough cedar house, where the snow would sit all winter, every spring, with a ice cream bucket full of water mixed with bleach and a large paint brush. I would put it on a large section and rinse lightly with the garden hose. Worked great. I would use a semi transparent stain (prefer oil base, but harder to find now), on your cedar once you get it cleaned.

use a stain remover or 50 / 50 house cleaner and bleach and scrub brush with pressure washer at lowest psi. you will be surprised how easy it comes off. you might need to hit with neutralizer after washing it with stain remover