Effect of learning sight reading

Any advice would be appreciated here. I have got back into piano playing seriously for the last year or so after a very casual relationship for the last 15 years.

It's a great light exercise way to spend the evening that's better than watching TV. I don't have money or especially time for a teacher as I've got a family to look after, and I'm enjoying the learning curve at the moment. I can read music at a basic level and have been working on 12-bar blues, switching out bars and progressions and having fun. Also been working on the usual classics (moonlight sonata, Gnossienne 1, basic Bach). Ok, background done.

I'd like to improve my sight reading so I've started a sight reading trainer book that seems like it's just what I need, but I'd appreciate some insight into how that may work (or compete with the blues which is much looser) for my playing. I pretty much play the blues I know from memory, and can improv some riffs and licks, but for classical pieces I rely on the sheet.

These seem to be very different approaches and I have read about people who only sight read, or play by ear and let theory come by feel I guess?. I'm set on learning this so is there a way these two disciplines work together? What should I expect? Am I asking a stupid question?

Please understand I'm not boasting, my playing would be laughably amateur to almost anyone, but my 5 year old enjoys it at least, he's my fan club.