This vast and often dreaded area of knowledge gets a lot of bad reputation among beginning guitarists. It’s often viewed as limiting on creativity, not romantic enough and generally uncool. At the same time however I doubt if you could find even a handful of renowned guitarists who submit to this point of view.
Although it is possible to play rather well without music theory, being a well rounded guitarist is whole other thing. But let’s take things one at a time.
1. If you know theory behind the song, you’ll learn the song much faster.
If you don’t care about music theory you just remember the arrangement of fingers. If you forget anything about that, you’re “doomed”.
At the same time, if you recognize this passage as A-Amaj7-A7-A6 its hard to forget it.
To put it differently, let’s say that you have to memorize a word: “drink”. Pretty easy, right? But now let’s take as many letters. Try to memorize a word “jfilr”. Entirely different situation. That’s because you’re concentrating on letters and not on word itself. Understanding and recognizing chords makes remembering songs more like a first case scenario.
2. Understanding how rhythm works makes you a better player.
Time signature, bars, beats. It’s all there to help you, not to distract you from music. Granted, if you have a good ear, you’ll be able to play a lot of things without understanding how it all works, but sooner or later you’ll encounter a problem in which only careful analysis and counting of beats (or even smaller subdivisions) can help.
3. There is no writing or arranging fingerstyle songs without a backbone of theory.
Of course you might be able to create something based on most popular chords with easily reachable melody. The moment you need to step off the beaten path, without theory you’re in much trouble. There are simply too many notes available to search haphazardly for a next one. And arranging is even more difficult. You’ll usually have to transpose the song, find chords, change a base note etc. Without some theoretical knowledge it’s almost impossible.
4. Understanding the theory behind a song allows you to fully appreciate composers effort.
Some most amazing and most ear-pleasing effects in your favourite songs are based on very clever harmony or rhythm. On the other hand you can be surprised by how harmonically-wise simple are some of the coolest and most fun sounding phrases.
5. In each song there is much more to learn than just notes.
By analysing songs you learn, you can get so much more from them. You get the ideas that you can use later, you learn more about theory itself, you expand your musical vocabulary and your imagination.
6. Knowledge for the sake of it.
In our utility driven society we often forget about it. Acquiring knowledge just for the sake of it is what makes us human. Even if we don’t see benefits right away (and trust me, sooner or later you will), sometimes just learning new things is its own reward.