The player can walk endlessly in any direction as more and more land will be procedurally generated. There are over 400 cities, towns and villages to explore, as well as many magical items and spells to create. Unlike later games in the series the player can travel through almost all of Tamriel, instead of being restricted to certain provinces. The player is free to raise any of the protagonist's main attributes by allocating the points gained with the level. There is no skill system leveling up occurs after a sufficient amount of experience points has been accumulated. Each race has its benefits: for example, Redguards from the province Hammerfell have physical attack bonuses.

In the beginning of the game the player chooses the race for the protagonist, based on his or her home province. The game features 3D environments, with sprites representing non-playable characters and enemies. It is the first chapter in the Elder Scrolls series and the first game that is set in the fictional world of Tamriel. The emperor's position has been usurped by impersonator Jagar Tharn, whose slain apprentice rallies the protagonist in his dreams to find the eight pieces of the staff and return the status quo. The Elder Scrolls: Arena is a first-person action role-playing game in which the protagonist must rescue the Emperor Uriel Septim VII from his dimensional prison by recovering the eight pieces of the Staff of Chaos.

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