I tell people the amount of theory you need to know -at a minimum - is what you need to get the job done. And that depends on what type of music you play and how good your ear is.
If you know what to play by ear, then music theory isnt critical. Nice to have, but not critical. Not too many have this talent, but I know of at least two musicians that dont even know the names of the chords and they kill it every time.
If you are going to do jazz, more theory is definitely better - (knowledge and ear recognition of scales, chords, their interrelationship, cadences,etc). Should know all the modes of the major scale cold and know where to use them, plus the Minor Pentatonic and their modes. Some of the Minor modesMelodic minor, diminished, augmented, etc..
If you are going to do 3 chord blues, you probably could get by knowing the notes in the 7 chords and the pentatonic minor scale plus a knowledge of of major vs minor , 6 vs b7, etc. Maybe the relative minor and the 251 cadence. You dont need to know what the Em7#9 chord is by name, but you need to be able to cover it. Knowing a dorian scale wouldnt hurt.
All the above is a great simplification and I personally like music theory and use it in my playing.
I would be interested in your opinions.