How does finasteride work? Is it really a hormone treatment?

Finasteride (Propecia) is not a hormone at all. It is what we call an alpha-5-reductase-blocker: it actually blocks the effect of this enzyme et so reduces the production of dihydrotestosterone (DHT) from testosterone. Yet, the hair which has a hereditary tendency to fall is sensitive to DHT. The decrease in DHT level enables the hair to grow normally. The treatment is then symptomatic. It indeed tackles indirectly the problem, but does not solve the problem itself. This explains why hair loss inexorably resumes after stopping the treatment.