In the grand scheme of things this is a very small step forward, but something extra nonetheless. As it's bundled with Arena Mode, it locks ARMS competitive play into that specific style of combat, including character, glove, and - possibly most importantly - stage selection.
The new Arena Mode will focus on "serious 1-on-1 matches", with up to four players being allowed into the arean at one time.
But yes, the big headline improvements here will be the LAN support and spectator mode.
To access this, players can access the Top Menu, clock and hold the Left Stick before pressing L+R to toggle between "Local" or "LAN Play".
Fixed a problem allowing Kid Cobra to dash indefinitely.
ARMS is a fighting game with a twist.
Biff will no longer misspell ARMS Grand Prix as AMRS.
Nintendo knows this. That's why it built LAN support into Arms and Splatoon 2 and why it hosted tournaments for both games at E3 2017. LAN support in particular should make local multiplayer sessions for the game - a key point in Nintendo's marketing for it - better supported and possible.
"ARMS" may have just been released but Nintendo is already pumping up the game with even more content to enjoy. LAN play offers the same modes as wireless local ("Party" and the new "Arena" mode) but via your Local Area Network (LAN).
ARMS Patch 1.1.0 should be available for download right this second.