I try not to overuse the 'T' word as it immediately turns a lot of people off.
After all the word 'Theory' carries the suggestion of an idea that is open to interpretation and not yet fully proven. If you play the notes A B C D E F G, you have played the A Natural minor scale. That's a fact - not a theory. So maybe we should talk about Music Knowledge instead. After all knowledge is power, as they say.
Better to think in terms of understanding how music works and being able to put the things that we play into a larger musical context so that we can get the maximum 'mileage' from our practice.
After all, we can learn to drive a car without knowing anything about map reading or routes - but isn't it nicer not to have to ask directions every time we leave the house?
Some gifted people play instinctively by ear, for the rest of us an understanding of harmonic construction can open many creative doors in our playing and song writing, leading us down creative avenues that we might otherwise miss.
It is not at all necessary to learn standard music notation (the dots) in order to play guitar but it is a useful skill to have and I teach this for those that are interested.