Cash vs Credit in Sicily

Most restaurants accepted credit cards. Fast food or counter service (locally owned) was sometimes cash only. Market stalls and street vendors were nearly always cash only.

I find using cash easier unless it's a bigger bill, and I think it's better appreciated. A hotel I'll be staying at in Castelvetrano is giving me a steep cash discount.

Here's Rick's tip on cash vs plastic:
https://www.ricksteves.com/travel-tips/money/pay-credit-cards-vs-cash

I only used cash for small expenses (under 5 EUR) like espressos, gelati, panini, or small lemonades/other drinks in small shops (outdoor markets with fruit, veggies, fish, etc. were "cash only" too). I also used cash for bus tickets but not for the trains, as they accepted credit cards. You will likely easily find restaurants in all but the smallest towns that will accept some kind of credit card, so you'll have plenty of options to use a credit card especially for sit-down meals (just be sure to see the credit card acceptance logos outside the door and don't assume anything). I withdrew very little money at ATMs when I was there but I didn't exactly go to the smallest towns either.

We only used cash for small purchases like gelato, cannolis and at the outdoor street markets such as in Ortigia.

We used credit cards at all restaurants in both large and small towns, but like others, cash for ices, coffees, etc.

Visa and MasterCard are almost universally accepted. American Express is not.

Italians prefer cash because it’s easier to evade VAT tax and also income tax.
Some will give you a discount if you use cash instead of plastic.
On the other hand the credit cards give you a better exchange rate therefore you need at least a 5 to 10% discount to make it worthwhile to you.
I generally use credit cards for hotels and more formal restaurants.

credit cards give you a better exchange rate

How do you arrive at that?

If you get your cash out of an ATM, the exchange rate is exactly the same as if you pay for something with a credit card. At least for cards, debit and credit, issued by a US based bank. This of course is excluding any fees for foreign exchange or foreign usage your card issuer charges (get a card with no fees already!!).