how does a signal(or function) generator work ?
does it contain an oscillator to produce required signal ?
Yes.
The type of oscillator circuit will depend on the frequency range of the oscillator.
If the generator is a low frequency type, say 10hz to 10Mhz for audio and video circuit testing, the oscillator may be a Wein Bridge type.
If the generator is a higher frequency type, say 10khz to several 100Mhz for testing RF circuits, the oscillator will probably be an LC type.
For higher frequencies 500Mhz and up, the oscillator may use some kind of resonant cavity as the frequency determining components.
Depending on the use, the generator will have facilities for modulating the signal.
My RF generator (HP8640B) has facilities for AM, FM and Pulse modulation.
My low frequency function generator (HP3312A) has facilities for AM, FM and frequency sweep. Its facilities are a bit OTT for my needs, but it fits nicely in the space available!
Another important feature of signal generators is the output attenuator circuit.
An RF generator will have a very accurate attenuator with calibrated outputs from say 3 volts down to 0.1 microvolts. To acheive this, the mechanical construction is critical for good screening to prevent direct radiation from the case of the generator.
A low frequency generator will often have an output from say 10volts to 10millivolts, and often does not have an accurate calibration.
Does this rambling discourse help?
JimB