Marriage is a coming together of a man and a woman to complete one another, to become "one flesh" (Genesis 2:24) - emotionally, intellectually, spiritually as well as sexually. Clearly the latter is important, for among God's initial instructions to the first couple was to "be fruitful and multiply." It is through the enlargement of the human race that God's purpose for humanity is fulfilled - for we all have the potential to become sons and daughters of the Almighty.
Marriage, then, is not to be taken lightly. This has been recognized through the millennia, and, to 'cement' the union, it is usually surrounded by elaborate, public ceremony with commitment to permanence and enforced by social norms. The breakdown of this pattern, especially in the Western world, has contributed to the decadence and decay of our civilization.
It can be seen, then, that sexual union by itself is far removed from an authentic - and Godly - marriage. The evidence above suggests mere cohabitation falls short on all counts.
But what of fornication? The Greek word porneia is in the New Testament translated so. In essence it is all forms of illicit sexual activity - in or out of marriage. (Any behavior that falls short of divine standards is 'illicit'.) Anyone who promiscuously persists in habitually having multiple sexual partners is a 'fornicator' (elsewhere translated 'whoremonger'), and is until repentance excluded from God's Kingdom. When such practices are permanently abandoned, they can, in Christ, be forgiven.
It is doubtful that a heterosexual couple in a stable cohabitation situation is guilty of 'fornication' - though it falls short of the glory of God, and does not reflect the divine purpose of commitment to a life-long marriage.