a sitemap helps search engines to crawl your website more efficiently. It is basically a XML file which is given to search engines. The sitemap contains all the file links and the last time they are updated. So this makes the crawling easier. An example sitemap can be seen here : techtavy.com/sitemap.xml. Choose a good plugin or widget for creating a good sitemap. I used Google XML sitemap generator for wordpress and it works pretty well.
Every one knows that a sitemap helps in proper indexing of your Website's pages Or all of blog post. in case of wordpress blog there are many plugins available to create sitemap but if u have a blog hosted on google then, as i know there is no plugin or widgets to create sitemaps. instead of making sitemap you can submit your blogs rss or atom url to webmasters account it will work same as sitemap as rss and atom contain information of all your post so google could easily crawl your blog.
normally sitemap helps in get indexing all the pages of a website and also helps to visitors to provide good information about your website pages
Sitemap works also in blogs like wordpress but in blogspot, although you can create it in sitemap generator but you can't upload it in google.
Sitemap lets search engine know how often a certain page or mainpage is updated, so crawler can always come to index/reindex it.
I use rss feed as sitemap for my wordpress blog. it has fixed number of posts, so when I add new, older are shifted down, and new comes to the top. that way google crawler knows what is new or updated. it spends less time on server and information on google is more acurate
Sitemap is not only important for indexing it also helps a visitor to look into your sitemap and navigate quickly and easily.