Hi Jo.
The red-dot finder is not an illuminated reticle. The reticle is an eyepiece effectively, but it's got a set of crosshairs built into it which are illuminated red. So it's much more magnification than your 1x red dot finder. You can use it for:
a) drift aligning
b) manual guiding
That's it.
Both are important when it comes to astrophotography, so it's important piece of kit to own. They're about $90 from Bintel, but remember to turn them off! I just found mine is flat again after forgetting to turn it off. The $90 unit now owes me $24 in batteries! It's becoming expensive to own!
The only advantage of the small refractor is that is has a shorter focal length, making it a wider field of view (less magnification) meaning that accurate polar aligning and guiding isn't
as critical as when you're working at longer focal lengths (more magnification).
You'll find that most people who do astrophotography wtih an SCT also use a focal reducer to reduce their focal length, for the same reason.