I have a basic question regarding chord progression in Piano. I usually play songs by ear. Once I develop the melody, I add the chords. Whichever chord sounds fit & within the key, I play that. Now, I would like to ask, do I have any reason to know about chord progression & how it can help me while playing songs by ear?
You might not have any reason to know about chord progressions! There are, however, many good reasons why knowing about them will help in your playing.
I have played (and still do, occasionally) with others who patently do not know about chord progressions. They play well-known songs with chords that aren't in the original, and even make songs with 5 or 6 chords play with only 3!
They could do so much better with knowledge of chord sequences, and being able to hear when a modulation occurs (or better still, pre-empt it!). There are players out there who still haven't understood that a song which uses C, G, Am, F can be played using A, E, F#m, D, or G, D, Em, C. Because they haven't bothered to look into that bit of theory, which could be useful to them, and others, if a song needs its key changing.
Knowing the cycle of 4ths is invaluable. Look through 1,000 songs, and see what chord is most likely to follow, say, B. Way more tha half the time, it'll be E or Em. Knowing the cycle will mean you have a good chance of guessing the chord that's just over on the next page. Not every time, obviously, but forewarned...
Being a little brutal, will it actually be detrimental to your playing if you know more about what you are actually doing? If you think yes, then continue with what you already do, in a slower, more painstaking and possibly less accurate way that could be improved by... you've guessed it !
You are restricting yourself by only choosing diatonic chords (if that's what you mean by 'within the key'. You can expand your palette through studying 'theory'. Even better, expand it by reading and playing a variety of music, including stuff outside your 'comfort zone'. 'Look what he did there!' - and add it to to your list of 'things that sound good'.
It depends on the song. Some songs rely on a recurring chord progression. You'll be able to hear it when you listen for the song. For example Heart and Soul has the progression I-vi-IV-V. And Canon in D has a progression I-V-vi-iii-IV-I-IV-V. Obviously if you know the progression then you don't have to do as much work when you're figuring chords by ear, because you can just go with the roman numerals that tell you what diatonic chords to play, and it'll be alot easier to transpose to different keys too.
Other songs don't have a recurring progression so best to just pick the right sounding chords like you're doing.
how it can help me while playing songs by ear?
Circle of fifth helps you to clear the ambiguity of choosing a better chord, you may end up with couple of chords by ear for a section of song and choose one which may not a better choice sometime, now the theory of chord progression helps you to choose a better one.
do I have any reason to know about chord progression
Yes, you can compose/rewrite songs, play the existing songs with more confident and add your own changes/styles on the song by learning chord progression. Some composers design the basic structure of the song with a strong chord-progression first and then add melody notes on top of the chord progression, in choral/4-part writing chord progression theory helps to choose lower voices(bass,tenor,alto).