From the scholia to Homer, Iliad 2.507. Stephanus of Byzantium lists 4 'cities' of this name, in various places, but the one the Suda means is unambiguous.
According to Pausanias 9.40.5 (web address 1), Arne was the original name of the settlement later (and better) known as Chaeroneia (chi 176), but Strabo 9.2.35 mentions a view that it had been submerged under Lake Kopais. Hansen 433 n.2 classifies it as 'a mythical toponym, not even to be placed on an atlas of Bronze Age settlements' (but he cites also J.M. Fossey's suggestion that it be identified with remains at present-day Magoula Balomenou).
For Terpander as a man from Arne, see under tau 354; and cf. generally alpha 3983.