First, use a putty knife to remove any loose material near the damaged areas.
Pour some dry joint compound powder into a large bucket and begin adding small amounts of cold water while thoroughly mixing the compound until it reaches the consistency of cake batter. A drill with a mixing paddle attachment will greatly speed up mixing time. This process of allowing the mix to cure and change from a powder to a useable putty is called "slaking." Cold water should be always be used as it helps slow down the curing and hardening of the compound.
Allow to mixture to sit for one minute before proceeding.
Apply the compound using a putty knife; work the material into any pockmarked areas of the wall. This particular process works best on gouges or pockmarks are 1/8" deep or less. For best results, work the putty around in several directions as you apply and remove excess as you work so that material is flush with the surrounding wall surface.
Allow the compound to cure and dry. Sand lightly to create a smooth surface before the second application.
Give the surface a second coat of the mixed compound, applying it in a thinner layer than in the first application. Use a joint knife this time to cover larger areas, joining the smaller repairs and surrounding wall area together and feathering the edges of the compound of you apply it.
Let the compound set overnight. The results should yield a wall surface that is smooth to the touch.