For one thing it's much easier to memorise a piece if you understand the theory behind it.
Imagine memorising a seemingly random sequence of letters. Now imagine how much easier it is to memorise a poem, because you know how the letters fit together to make words, the words go together to make lines, the lines have a rhythm, some of the words rhyme, and the sentences have meaning.
It's just the same with music. It helps to know when a chord change is conventional, and when it's more unusual. It helps to know when a chord change or a melodic element is going to come in, if you understand the rhythmic structure of the piece.
How, and in what form, you learn the theory, is another matter. If you have a certain kind of mind, it's possible to self-learn a lot of musical theory, without knowing the academic names for the things you are learning, simply by working your way through a canon of music (for me it was the Complete Beatles songbook) and observing things. Later you'll discover academic terms that apply to the nameless things you've learned.
However, working through a good book on theory is probably a faster way to get the same knowledge into your brain, and you can communicate with other people who know the terminology right from the start.
Just as you can enjoy a poem, and write poems to some standard, without academic study of literature; you can enjoy music and create music knowing only what you've learned from singing nursery rhymes. But the more you know, the more tools you have to either make music-making easier, or to allow you to do more sophisticated things.