Geoguy's advice is correct, the only thing to remember is that the straight edge should be on the frets only, not on the nut, as that can lead to a false indication.
As for frets, first indication is can you see marks/divots on the frets themselves. If not, then you are pretty much home free (after you play the guitar). If you can, run a fingernail over them, if the fingernail catches, then at the very least, a fret dress is in order. or a re-fret possibly. After all of that, play the guitar as you would any other guitar, being careful to note any fret buzzes. If the fret buzzes are only in one or two fret positions, it indicates that there may be one or more frets are high or low. If you cannot get the guitar to play cleanly in the first 5 or so fret positions, look at the frets from the side of the neck; if they appear low, then they are, and the guitar will probably need to be re-fretted. It is possible that the frets all the way down the fingerboard can be low, but most people play a lot of chords in the first 5 positions, so the fret wear is highest there (and usually in the area where the B and High E meet the fret. If it is only one or two fret positions, you can use a short straight ed that spans 3 fret positions to figure out which fret is high or low, and then correct that.
A re-fret can be partial or full, the partial re-fret generally covering only the first 5-6 frets, a full re-fret replacing all of the frets. In either case, it is usually followed by a fret leveling (makes all the frets level), re-crowning frets (makes the tops of the frets rounded), beveling the fret ends (to make them smooth so that you can run up and down the fingerboard without shredding your fingers), and then a fret polish (smooths off the surface of the frets to make fretting, and especially bending, feel nicer).
Kostas