In previous Fire Emblem games, the Arena was a building found in chapter maps and was used to bet money on your units to fight with given weapons against a random enemy. If you won, you earn back double of your entrance fee, as well as delicious EXP for your characters! If you lost, however… you’ll have an unwanted death with your character.
This game reincarnates the Arena as a more forgiving, fun(?) feature, where you bet resources on your fighters to increase your yield. The combatant, which is the person manning the Arena, does not gain any experience or weapon proficiency; however, if they lose, your only loss is your entrance fee and some pride.
Sometimes, your allies will back up the combatant in attack stance and go two-versus-two with the enemy, also in attack stance. If that happens, you will get points towards character support between the two units. The character with the highest support level with the combatant will be the one to back them up. You can choose which character is the main fighter.
Your fee is 1 of any resource of your choosing, whether it’s local or from the other kingdom. Level 1 arena only lets your combatant partake in one battle, while Level 3 lets you partake up to 3. A little bit HP is restored between rounds. Each victory will double your earnings, for a maximum of 8 of the betted resource! If you don’t think your fighter can make it through the next round, though, you can always take your earnings and leave.