Arenas are special zones where premium players can test and practise their combat skills. Contrary to all other fights in Tibia, characters that die in an arena fight do not lose any items, experience or skill points.
Arena fights are started via an NPC, where the initiating character can select between two different battle modes: "Last Man Standing" and "Team Deathmatch". The winning team or player has the chance to win a nice bit of money in these fights.
For detailed information on arenas, please have a look at the manual.