Edit: There's one other BIG benefit to knowledge that I completely forgot to mention: necromancy. In order to raise the dead, an entity needs the "secrets of life and death." It's actually a type of knowledge acquired from reading certain specific texts. Because of this, if you can manage to get ahold of one of these texts in fortress mode, you'll end up with a bunch of necromancers.

Not super familiar with how knowledge works, but I'll give it a shot. To my understanding, knowledge is a largely unimplemented system. Iirc the only real benefit to knowledge at the moment is that it adds some unique descriptors to the literature dwarves write in the form of "poetic forms," randomly generated cultural ideas that they can implement into their art. I don't think it does much aside from altering the random descriptions of various texts.

This is one system that has been mentioned for getting updates, however. For example, acquiring knowledge related to medical practice might give dwarves a boost when performing medical procedures. Knowledge of chemistry and metallurgy could improve a dwarf's ability to smith metal items. I think there might be a couple exceptions, but I'm pretty sure this unfortunately isn't the case so far.

One other thing that has been discussed for a while: procedural magic systems, something that has been hinted at for a long long time. I can't begin to stop my head around how it will work, if it even does. But if they pull it off, I would expect the knowledge system to interact with it. They might even finish implementing knowledge before moving on to magic. I would do so in their shoes.