ARC = Audio Return Channel
http://www.hdmi.org/manufacturer/hdmi_1_4/arc.aspx
Up to HDMI 1.3, if you had a sound receiver->TV setup and you wanted to watch normal DVB from the TV's tuner, you'd need to connect some sound output from the TV to the receiver, needing 2 cables in the process: HDMI for receiver ->TV and optical/analog for TV -> receiver.
HDMI 1.4 brought ARC, which allows the TV to send a sound signal back to the receiver and have the later reproduce the sound.
This functionality later came in handy for people (like me) with older HDMI 1.4 receivers who eventually upgraded to 4K TVs. Since HDMI pre-2.0 receivers won't passthrough 4K60 video streams, to get 4K + surround sound from e.g. the PS4 Pro I need to do PS4Pro -> TV and then TV -> receiver.
Now the problem with ARC in HDMI 1.4 - 2.0 is that it only supports the same formats as the 20+ year-old SPDIF, meaning you get either the old 5.1 compressed+lossy Dolby Digital and DTS, or 2.0 uncompressed PCM.
So while I got a relatively large upgrade in image quality (1080p->4K, SDR -> HDR) in all the PS4 titles I got a downgrade in sound quality because I used to have the console sending uncompressed/lossless 24bit 5.1 LPCM but now everything must go through the lossy+compressed 16bit Dolby Digital format.
HDMI 2.1 brings eARC (
enhanced ARC) which not only supports the lossless 7.1 formats like Dolby Digital TrueHD and DTS:HD, but also extends support for the latest object-based audio formats like Dolby Atmos and DTS:X.
If you're using a PC as a source, eARC also supports LPCM (at least up to 8 channels but it's probably more), whereas the old ARC only supports 2 (two) channels.
Pair this with VRR and support for resolution increases at least up to some 8-10 years down the road and it should be obvious that people who want their equipment to last should definitely wait for HDMI 2.1 devices.