The main benefits of using a sitemap are that search engines will include a higher proportion of your pages in their index and that you can notify them of changes to your content. Another big benefit is that you can use Google Webmaster tools to get reports of potential crawling problems such as broken links (404 errors) or crawling problems.
In general yes, however the results vary from site to site. One of our reviewers on had this to say about Sitemap:
“This is a must have for all EE websites we build. It is easy to set up and results are seen quite quickly.”
You should submit the full url to your sitemap template. You can easily get to it by clicking on the View Rendered Sitemap link in the Sitemap Module page.
Updating your channels in the Sitemap add-on settings should fix this.