It will erase all user-installed apps and their data and reset all settings to default. So back up anything important before doing this.
That incidentally is all a factory reset does: clears everything you've put on the device. It doesn't touch the system software in any way.
As to whether a reset will fix your problem, that depends on what's causing it. If it's an app/data problem, cache corruption or similar, yes. If it's hardware or a bad system update (though those should be tested before distribution), no.