I dont have the Control Design and Simulation package installed on my system, but I think I can help you anyway. The simulation vi's are meant to help you code the rest of your program without have a real function generator to generate the signals. You can test your math part on a simulated signal.
If you have a real function generator, you can use VISA (under Instrument I/O) or NI-FGEN (under Measurement I/O) to control your real function generator. You will then need a DAQ card or something to capture t he waveform data from the function generator.
Is it necessary to have real generator for your project? The simulated signlas work quite well. Also, to simulate a signal, you can use the functions found in the Functions palette - Waveform - Analog Waveform - Waveform Generation. Here you will find functions like Basic Tone Generator, Multitone Generator, Sinewave generator, etc... There is a help screen on how to use these functions. You can generate complex waveforms by adding and multiplying different waveforms.
For the math part, to me it is a matter of preference wether you use a formula node or actual math functions to achieve the desired result. One works as good as the other. I don't like function nodes because it adds some text to a graphic language. However, for complex formula's it may be easier to use the formula node.
I hope this answers your questions.