I hear some people say certain players only win because they know/memorized a lot of theory? I don't know the "official" term for these types of players but it makes me concerned because hopefully I'm not one of them. It makes it seem these types of players aren't good at chess or don't really use their head to play the game. Can someone clarify what this is all about?
Chess theory in this sense refers to opening variations / opening analysis. Every strong player has a repertoire of opening lines that he likes to play and in which he knows pretty well which moves are the best.
Some players analyse the opening exhaustively and try to find tricky lines before they sit down to play. This is helped by the fact that they can look up games of their next opponent in databases. These players occasionally win games just by following their home preparation.
But this is not something that should overly concern you. It's more of a grandmaster's problem. On the top level in chess opening preparation plays a big role. In amateur games it is usually easy to dodge any kind of special preparation by the opponent.
It is easy to look down on people who spend a lot of time learning opening variations by heart, but in reality spending time on the opening also improves your understanding of typical position, tactics and plans. If somebody wins a lot of games in the opening, this is never just due to reproducing learned lines with no understanding. Chess is too complex and diverse for that.
certain players only win because they know/memorized a lot of theory
That's just nonsense. Anybody who wins regularly does so because they know rather a lot of theory.
BlindKungFuMaster's claim that
Chess theory in this sense refers to opening variations / opening analysis
is also nonsense.
Theory is a lot more to chess theory than just opening theory. Endgame theory is the most important part of chess theory. If you don't know any endgame theory then most of your games will be a matter of luck.
Do you know how to mate with king and queen against king? Yes? Then you know some theory. King and rook versus king? King and two bishops versus king?
How about pawn endings? Do you know when king + pawn versus king is a win and when it is a draw? How about king + rook + pawn versus king + rook?
Already we have touched on a lot of important theory. If you know this theory then when you are playing the middlegame you know what kinds of endgame you can aim for and win. If you don't know how to mate with king, knight and bishop against king then don't aim for this endgame because it is going to be a draw.
If you have an extra pawn in an endgame with just kings and several pawns and your opponent lets you swap off into an endgame where you have a king and a rook's pawn against his king and so it ends in a draw is that somehow unfair? Is this "somebody who didn't really use their head to play the game?" No, your opponent earned the draw by virtue of his superior theoretical knowledge. If you had the same knowledge you wouldn't let it happen.
Endgame theory is rather concrete. Middlegame theory is much more fluid. When does sacrificing the exchange give you a winning advantage? When are doubled and / or isolated pawns good? When are bishops better than knights? How about knights better than bishops? When is it OK to leave the king in the center? When is it better to castle? Again somebody who has a better understanding of these theoretical ideas will play better than somebody who doesn't.
As regards opening theory, if you don't know any opening theory you will struggle to get out of the opening against a good player. Opening theory isn't just knowing a set pattern of moves to safely develop your pieces it is also about knowing some of the typical plans that come out of the opening. It is all very well playing the first 10 or 15 moves according to "the book" but if you don't have some good ideas what to do next you will struggle to reach move 30 unless your opponent is in the same situation.