Music theory is a great and useful tool. You can understand songs, play songs, feel more confident and develop your playing much faster if you're aware of theory.
It can limit your playing, if it's not rooted in your spine.. And that takes some time. The first years of theory studies, some people often think about theory as a "main thing" when they´re playing.. Then it limits the "inner musicality". When you get the basic theory under your skin, you can focus on your musicality and the theory knowledge is just there as a confidence tool, without disturbing the playing.
I think one should apply theory as much as you can when you're practising. When you're playing live you should try to focus mostly on the music itself. I think
