I completely agree with this. Learning music theory helped me play by ear because it helped me associate a feeling with a progression or chord. This made learning by trial and error much easier, since it stuck more (I tried it without much success when I was younger).

- Also Jazz Pianist

For me the theory helps me understand how to execute what I hear in my head.

Interesting, so it's just practice followed by more practice?

Something I've recently started is putting on a music video and then trying to play along with it. It's pretty tough, but I manage a few bits here and there...

It helps a lot to be able to recognize if something is on a standard diatonic scale & chord progression, or uses chromatics and modulations. It greatly reduces the search space if you know the notes and chords you're trying to find are out of 7 choices rather than 12/48+.

If you can't recognize that yet, finding tablature or sheet music can help you tell for a given song, before you go banging your head against a wall trying to figure out something that is musically unusual.