Well, it depends on the type of surgery. If it is a cliordectomy or a metoidioplasty, then all that is happening is an enlargement of the clitoris, which is made of the same basic stuff of that penile tissue is made of- ordinary women's clitorises become erect just like a penis, so the new organ, enlargened from the testosterone and sugery, will also become erect, and is sometimes large enough for shallow penetration to occur.
If it is a phalloplasty, which results in a penis in similar size to that of a biological man, then it's somewhat different: the organ is made from donated skin and nerves (usually from an arm), and, while it is 'hooked up' to the genitals, so to speak, and has feeling, the same sexual reaction won't occur from the brain sending bloodflow to the organ for an erection. It will remain flaccid. FtM's with this sort of organ have a way around that, however- they use a pump device located in their bodies to achieve erection, just the same as a lot biological men who are impotent or have erectile dysfunction. Then deep, penetrating sex is possible.
Neither types can ejaculate- they don't have the internal system to produce semen, even if a set of testicles are added. It's just the same way that a MtF can't become pregnant because although a vagina was installed, a uterus cannot be- we don't have the capabilities to create vas deferens and all that piping and everything necessary. However, women can and do ejaculate, and it's understood that FtM's with that ability beforehand would still be able to do it afterward, especially if they just had a clitoral-enhancing surgery. If a hysterectomy took place, however, and the vagina was sewn up, then of course ejaculation is impossible.
Hope that helps! And the reasons for a sex change, even when it isn't necessarily as good as we want it to be, are to get closer to how FtM's feel themselves to be on the inside. Even a little bit closer is better than nothing.