Sight reading is the skill to read notated music on the spot without learning to play what it is you are reading. You read the notes as they are written down on the sheetmusic and transfer this on the spot to the fretboard of the guitar.
Being able to read music is helpful for learning new techniques and new pieces, it will help you understanding rhythms and music theory better. It will improve you to be a better guitar player.

When you are new to sight reading get yourself a simple, basic tutorbook and just start playing. Most of the tutorbooks will come with a CD to give you an idea what the sheetmusic sounds like. In the beginning you will need to start to learn to names of the notes and where you can find those notes on the fretboard of the guitar. Most of the pieces you will learn in the beginning are written for the open-and first postion. The open postion uses a lot of open strings, the first positon is the next position up on the fretboard from the open postion.  Once you start to understand the notes try to play the pieces, you have just learned in the open postion, in a higher postion on the fretboard. Find the first note of the piece, play this note in any higher postion and then try to find the other notes. Go slow in the beginning. Before you know it the fretboard will open up and you will start to see the notes all over the fretboard.

Instead of working with dedicated guitartutor books you can also use the material from guitarmagazines, tutorbooks for violin and flute. The music found in violin-and flute books can easily be translated to the guitar since the violin and flute are both instruments which can play single notes.

Try any of the above suggested ideas to inspire your playing, remember the reading is only there to help you to tap into other forms of music and techniques. Give it a go and keep at it.

Enjoy and hope to catch you soon again for more ideas to stimulate your guitar playing experience.
Eddie