ARC, Audio Return Channel, is an HDMI connection that gives you bi-directional audio. The best it can do is 5.1 and the only real advantage is that you can eliminate the use of an optical cable. Both devices, the receiver and the tv have to be ARC capable, otherwise it will default to uni-directional, from the source to the tv. ARC will allow to send audio to your tv and receive audio from your tv using a single HDMI cable. ARC is usually associated with CEC, Consumer Electronic Control, because both use an HDMI connection. CEC allows you to control all HDMI-connected devices with a single remote but it is fraught with incompatibility issues. Sometimes it works, sometimes it doesn't.
I disabled ARC/CEC on my system and use a single optical cable from my tv to the receiver to send audio when using the internal ATSC tuner for OTA tv. All other devices are connected via HDMI to the receiver. I use a Harmony programmable remote to control all devices with a single remote.