Audio Return Channel (ARC) is something I consider awesome for people who have their receiver located further away from their TV than most.
In situations where you have a game system, or video camera, or any HDMI enabled device you can plug it into the HDMI input right on the side of the TV and the audio will be pulled off and sent to the receiver using the ARC.
Similarly, if you have a Blu-ray player locally to the room, instead of having to run (potentially) a long HDMI cable back to the receiver, you can just run it locally to the display, then let ARC carry the audio back to the receiver for surround sound.
This is (potentially) also nice if you want to use local TV speakers from time to time as you can run all your sources to your TV, then use ARC back to the receiver. You get local audio from your devices right at your TV, but can turn on the receiver and get surround sound that way.
I've had a need recently for this as I have some rooms which are about 100'+ away from the receiver and running HDMI that far is already iffy. So, I can use ARC to handle everything far more easily. Cable box in the basement, Blu-ray player in the room. No audio/video issues.