Arousal is a physiological and psychological state of being on higher alert. Neural areas become sensitive and responsive to incoming signals - during sex, mainly the erogenous zones.
In men, it is evidenced by a boner and is nearly impossible to hide.
In women, it can hardly be identified easily. The visible development of pussy juice running down her legs might be a sure fact. Erected nipples can have many reasons and are not an indicator for sexual arousal.
In both cases it not only means to produce some kind of body reaction but also that you want to start sexual activities like kissing or fucking or masturbation depending on the occasion and location that sexual arousal happened. A secondary indicator is the face expression.
Sexual arousal is caused by dreams, visual stimulation (like looking at nude girls in real life or on a screen), conversation, smells and many other causes.