Playing 'by ear' is far more useful for folk-related music, as all too often the dots are merely a representation of an average... there are almost as many versions of a melody as there are people playing it, and to be pedantic about which version is 'correct' is another thread altogether!

If you can read music sufficiently to work out how the tune goes for starters, that's probably all you really need.

As for myself, I read music fluently as I was classically trained. However, unlike most classically trained musicians my first instrument was the voice, so when I've learned to play instruments I've kind of learned to play by ear even though I'm 'reading' the dots. In other words, I look at the dots, hear the tune and then can play it on virtually any instrument.

Unfortunately, a lot of classically trained musicians find playing 'by ear', or even without the crutch of the dots, quite difficult... so I count myself fortunate that I can do either with little difficulty.

Some tunes are easier to play on one instrument as opposed to another, usually because the tune originated on that instrument - playing fiddle tunes on pipes may not be as easy as playing pipe tunes on a fiddle, for example. Again, another thread needed!