A sitemap is a flat method of presenting your web site's navigation. Flat means there is little to no structure. In other words, one (maybe two if your site is huge) page links to all other pages and tools your web site provides.
Your regular navigation should be intuitive enough for the standard user to find any content within 2, maybe 3, clicks without having to search around on the site. Some users, however, want to see all of the content at once. A sitemap allows for that. Some pages may not be very important to you but you have them on your site anyway. You can "bury" those pages by not linking to them in your standard navigation but linking to them in the sitemap. Users and search engines can find these obscure pages but often they won't get a lot of traffic.
A great reason to have a sitemap is for search engines. You can aid them in the spidering of your site and the locating of all pages by providing an easy to find sitemap. Google and Yahoo provide services where you can submit an advanced version of your sitemap using an XML file. There are tools you can use to build these advanced sitemaps. Once the sitemap is produced then submit it to the search engines. Search engines supposedly use these to fully index a site.
Any time you add a new page you can update your sitemap so users and search engines can see current content.

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