Sight reading a piece of music is playing it correctly at first sight, without any prior preparation. This is a very important and useful skill for all musicians to develop.
Sight reading is often asked at auditions and can fluster even advanced players.
The best way to improve your sight reading skill is to become fluent in all scales - major and minor. For clarinetists, I recommend the Carl Baermann Book III. Studying this book will give you the fundamental skills needed to play in EVERY key signature! And even after you become proficient, keep practicing it! You can download the book from IMSLP.ORG.
In addition to the Baermann scale studies, I recommend the Rose 40 and 32 Etudes, which can also be found on IMSLP.ORG. Through the study of these etudes, you will learn rhythm, technique, phrasing, embouchure, etc.
Scales and etudes are so important for developing fundamental skills. Once you have those fundamentals, sight reading becomes easier, learning a new piece of music becomes less laborsome and you won't become unnerved at auditions. You'll also have more fun playing in ensembles and impromptu get-togethers with friends!
Also remember: You are NEVER too advanced to work on fundamentals! Keep practicing!