You do not need sleep. Night is a bit more dangerous, so if you are struggling in an area, try to find a safe place for the night, but if the enemy are generally not too tough for you, keep on going. It can be nice because many things you want to click are easier to see in the dark due to glowing.
By the time you get to really dangerous places, like the plains (groups of starred enemy can be tough) you should have a portal and go home to dump your cargo, refill your food, repair your stuff, get your big rested buff, and hit it again.