What is a keyword sitemap & why is it important?

Why is this important? Google works in such a way that you need to provide it with the best possible landing page for a given keyword.

What is the best possible page? It's a page that is dedicated to, and knowledgeable/authoritative, about a topic.

Let's say I want to rank my plumber's website for the two terms "plumbing" and "bathroom installation".

Now, although these two terms are closely rated to my business, for Google they are two individual topics. Therefore I am not best advised to SEO both of these keywords on a single page.

Why? Because you're diluting the authority of that page by talking about two subjects.

The solution to this - from an SEO point of view - is to create different landing pages for each service, like below:
domain.com/plumbing
domain.com/bathroom-installations

You can then SEO each of those pages for the relevant keyword, and have a much better chance of ranking in Google!