Sleep deprivation is a source of general bodily stress. When the body is under stress, like when you don’t get enough sleep, it increases production of the hormone cortisol. Some cortisol is necessary, but too much cortisol puts a person in a false “fight or flight” state of functioning, at the expense of bodily processes that aren’t necessary to immediate survival (like sex). Excessive cortisol production inhibits production of insulin, narrows arteries, and increases heart rate. None of these phenomena benefits erection health.
Mental aspects of sleep deprivation affect erectile ability as well. When you’re sleep-deprived, it’s harder to relate to people, you’re generally more irritable, and it’s more difficult to get into the mood for sex. If you have problems with erectile dysfunction, insufficient sleep will only make things worse.
Just plain getting along with people is easier when you’re well-rested.