Many synths can only play one note at a time (they are monophonic). With the arpeggiator on, if more than one note is pressed at a time, the synth will alternate between the notes. They also often have a range control that allows the user to tell the ynth to play additional octaves - so if the range is set to two octaves the synth will play the keys that are held down in the octave that they are played and then in the next octave up/down....
