ARC, which stands for audio return channel, is part of the HDMI 1.4 specification. It enables your HDMI cable to both send and receive sound, which is useful because it means you only need one cable to connect your TV to your compatible sound system, no digital audio cable required.
There are some caveats though, as the video explains. For more basic information on what HDMI is all about, see our feature Why HDMI? What you need to know before going digital.