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1) be able to know how your opponent thinks and reacts in different situations.

2) be able to base your play on what you know about their play, and what you know they know about your play.

3) be right in your decisions based on that knowledge significantly more often than you are wrong.

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Do you mean this in a general way: it is important to know how poker players think and how they react to different situations; or do you mean this to be player specific: it is important to know how player X thinks and how player X reacts to different situations.

I'm sure both are valuable. But, I wonder which you were emphasizing.