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Arousal levels, regardless of the emotion behind it, affect the way a dog reacts to their environment. An over aroused dog is more likely respond to a sight, sound, smell, etc. in a way that we, humans, find undesirable.
Let's take the walk...
First, you change into comfortable clothes, put on your walking shoes, grab your keys and phone, call for the dog as you pick up their "walking" gear. Now your dog is bouncing off the walls! You struggle to get their leash on. Opening the door is a challenge because they are in the way. Finally, you pry the door open and out the dog bolts, hitting the end of the leash. The pulling continues throughout the walk. Your dog barks and lunges (or cowers) at multiple things along the way. By the time you get home, you are exhausted, frustrated, your shoulder hurts and your dog either is wound up tight or so exhausted from the stress of the walk that they crash.
Sound familiar?
This is an example of a dog that is over aroused before they even leave the house. They are so excited about "the walk" that, frequently, they are unable to perform "known" skills. Any stimulation they encounter in the environment after that point is increasing their arousal resulting in a stressful experience for both of you. De-sensitizing them to the steps you take in preparing for the walk, waiting for calm(er) behavior before going out the door, and gradually introducing them to the different experiences they will encounter on the walk will make the whole experience more pleasant for you both.
Over arousal contributes to many "undesirable" behaviors. One of the greatest gifts we can give our dogs is to learn ways to help our dogs stay calm and teach them more desirable ways to interact with our strange human world.