Anyone who knows me, knows that I love the guitar dearly. After 25 years of playing it, I'm still captivated by this marvelous instrument with it's complex fingerboard and the array of amazing tones it can produce.
Having stated that, the guitar has always been in the service of studying music. When I played rock guitar as a kid, instinctively I knew that I had to study rock music in order to excel - how it was written, what is commonly used in the style, how to improvise, how to write songs. When I studied Jazz music it was the same - we didn't talk much about how to play the guitar, but how to use the guitar to play Jazz music fluidly.
As students of the classical guitar, we don't necessarily have to know anything about the music we play. We see the notes on the page, and often the editors make sure that most (if not all) of the fingering is added into the score. The only knowledge that is needed to play even the greatest masterpiece is 1. where to put the fingers and 2. what rhythms are being used. This sort of "notational tablature" is one of the biggest problems I see in students.
We cannot excel at any style of music by simply putting our fingers in the correct place at the correct time. There are no excellent jazz guitarists that I know of who don't have an understanding of jazz music. There are no great pop guitarists who don't have an understanding of pop music. And consequently, there are no great classical guitarists who don't understand how classical music is written on the guitar. Often, I think that students forget that they are studying classical music on the guitar - as if the classical guitar is more about the technique than the music. Let me be clear - if you are studying this style, you are studying classical music on the guitar.
If we look at Fernando Sor's Guitar Method we can see clearly that he is instructing the student primarily in the language of classical music - what is commonly used, what chords, what intervals, what each key contains, etc. and THEN - how it is found on the guitar. Sor emphasized learning classical music through the guitar - not learning guitar technique through classical music - which is so often the case in modern methods.
Sor was correct - if you understand classical music and how it is applied on the guitar, you will learn the music faster, sight read better, memorize easier, improve your ear, interpret music more confidently, become technically more fluid, etc. etc. Everything about your playing will improve.
Please also check out Christopher Davis' excellent post on Sor's method of learning notes on the guitar - http://www.classicalguitarblog.net/2010/01/fernando-sor-advice-for-learning-notes/