Sigmund Freud's theory of psychosexual development outlines five stages crucial for personality formation from birth to adulthood, emphasizing the role of early experiences and pleasure-seeking behaviors. Each stage, including the oral, anal, phallic, latent, and genital stages, is centered around specific erogenous zones and presents unique conflicts that can lead to fixation if not resolved properly. Fixation can result in various personality issues in adulthood, illustrating the lasting impact of these formative experiences.