Healing Priority and Mana Managment
Ok, you have the gear, you have specced holy, now what? Head out there and find a group to adventure with, what else! As a holy based priest you should be spending most of your time in a group since you solo about as well as a level 1 gnome. Once in a group and adventuring, though the most important thing to understand is healing priority and mana management. This is something that ALL healers regardless of class need to learn and what truly seperates the good healers from the bad. The two things can sometimes be viewed individually, but are best thought of as a pair at all times. Ok, so what are they?
Healing Priority - The order in which you will heal people, or in extreme cases allow them to die.
Mana Management - Managing your mana so that you can heal for as long as possible. This can tie into healing in bursts and then resting, or just healing key people and forcing others to bandage, etc.
Now that you know what they are, how do you use that knowedge? The first part is establishing your healing priority and sticking to it. In a standard 5 man instance group you will have something like this for group composition: Tank, Healer, AOE DPS, DPS, Misc. In most cases, this list is also your healing priority list. Ussually your tank is the most important person to keep up with yourself being immediatly next in line, it then rolls down to AOE DPS or DPS depending on the instance and then the miscellaneous person in the group. This will change based on individual situations but is the general rule.
The last part of healing priority is making sure that you know when to keep people up, and when to let them die. This is basically exceptions to the above order. There are situations such as the Mage or Warlock are doing mass AOE against a group that needs to die, or a single MOB being left at low health and a last heal being available for the tank or DPS (where DPS would be more likely to be able to kill them), or any number of other specialized situations. While it is important to stick to the priority as much as possible, you should learn to recognize when exceptions to it are important as well.
Mana management is managing the amount you heal in a fight. Sure it's possible to heal everyone as soon as they take damage and even to keep everyone at 100% health, but why and for how long? If the tank is taking most of the damage and everyone else is just taking collateral damage from things, why heal them at all, unless they are below 50% health? If players are pulling aggro just because they know you will heal them, stop, make them learn aggro management. If everyone is above 80% why cast small heals, wait a while and regenerate some mana.
Part of mana management is also worrying about how big of a heal is needed and how much mana that heal will cost. Is it better to cast many small heals, or wait until the player is lower in life and cast one big heal? Since big heals are generally more mana efficient, it is generally better to wait and cast a bigger heal. This is not alway practical though, so you need to learn to judge.
The last part of mana management is to look at how far down the healing priority list to actaully heal, and by how much. At times someone way down that list will be at 30% health and you could get them to full health with a big heal or 60% health with a small heal at less than 1/2 the cost and 1/2 the time. You need to learn to manage those situations and realize that full health is not always needed (despite everyone being damaged always calling for a full heal).