Is being able to sight read music a good thing?

Yes.

Is it necessary to be a good musician?

Hell no!

Is it necessary to study music theory?

Absolutely hell no!

Is standard notation for stringed fretted instruments superior to TAB?

Standard notation is a far inferior method to convey what should be played when it comes to stringed fretted instruments. Especially since almost all TAB programs include standard notation.

The snobbery from the folks who subtly imply that musicians who don't sight read are somehow less of a musician than readers is repugnant. It's sad to see it still persists on here. I wish I could say I was surprised.