The primary function of sex hormones is to create a functional reproductive tract that can give rise to the next generation without any hiccups. This is what it mainly does but what people focus on is their secondary characteristics― body hair pattern, libido, external and secondary sex organs, muscle mass, etc. The sex hormones create sex cells, maintain them, and create new ones when the old ones become non-functional. Libido is also directly proportional to the amount of sex hormones circulating in your blood (generally).
Arousal is more of a neurogenic phenomenon than a hormonal one. While sex hormones definitely take part in it, the main mechanism is through your brain, which then activates your autonomic system to prepare for sex.
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