"Keep the indicator in the yellow field. If the yellow field reaches the left end of the bar, you lose. If it reaches the right end, you win."
That's all the description it gives, without a single hint as to how to move the indicator one way or the other. How on earth does this work?
Best Answer
You use your mouse to move the indicator inside the yellow bar back and forth. Move your mouse back and forth with the bar and make sure you keep the indicator within its constraints. If you stay inside the yellow bar, the bar moves to the right; going outside the yellow bar turns your indicator red and makes the bar move to the left. If the bar reaches the far right, you win, and if the bar reaches the far left, you lose.
As noted in the comments, your mouse controls movement of the indicator within the yellow area, not within the entire indicator, so you don't have to move the mouse much at all to win.
The strength, or difficulty, of your arm-wrestling opponent appears to influence two factors of arm-wrestling:
Because the bar becomes smaller the longer the arm-wrestle lasts, it's easy to return your indicator to the bar if it falls out at the start of the match but very difficult to return your indicator if it falls out when you were just about to win.