Arbitrage is when the price differs between two different exchanges. Profit is generated by buying low on one exchange and selling high on another!
Arbitrage is typically made possible by a difference in trading volumes between two separate markets. The reason behind this is simple: in a market with high trading volumes where there’s reasonable liquidity of a particular coin, prices are generally cheaper. Meanwhile, in a market where there’s limited supply of a particular coin, it will be more expensive. By purchasing from the former and instantaneously selling on the latter, traders can theoretically profit from the difference.