Suppose that you have 10 BTC and 5000 USD in each of the exchanges X and Y. Suppose that the price has been rock solid at 500, with plenty of liquidity and tiny spread, in both exchanges. Your total worth is 20 BTC and 10000 USD.
Price drops in exchange X, and you see an ask of 1 BTC at 490 there. You buy 1 BTC at X for 490 and sell 1 BTC at Y for 500. Suppose that it raises the price at X back to 500 BTC.
You now have 11 BTC and 4510 USD at X, 9 BTC and 5500 USD at Y. Your total worth is now 20 BTC and 10010 USD -- you made a 10 USD profit.
If prices in X and Y fall below the price paid to acquire bitcoins minus the spread the arbitrageur incurs losses. I see speculation in X and speculation in Y under a central-bank-like approach, not strict arbitrage.