The lower the arc segmentation value, the more line segments are used to create the arc (which makes the arc more precise).
You specify this setting on a per-feature layer basis: all the features on that layer use the same setting. You can set it manually for the current feature layer, or you can specify that the native data store for each feature layer is used to determine segmentation. The segmentation occurs at check-in time. In direct update mode, it happens right away. If you use direct update, you can change the segmentation value just before you change and check in each arc.
To use the original (or target) data store's native values for arc segmentation, use the Use Feature Source Setting To Segment Arcs setting in the Feature Editing Options dialog box. When you turn this setting on, you cannot adjust arc segmentation manually. The arc/chord distance for an Oracle feature class is based on the resolution tolerance (x and y resolution) set when the Oracle data store was created. The tolerance used by SHP is based on the arc’s extents.
The arc-chord distance measures the vertical line between the center of the arc and the mid-point of the chord connecting the two ends of the arc. The lower the value, the more line segments are used to create the arc (which makes the arc more precise).
The setting goes into effect as soon as you adjust it. The current setting is used when saving back to the original data store, when exporting to a data store that does not support arcs, and when using Bulk Copy to move the data into a data store that does not support arcs. You can also set options related to arc segmentation in the mapexport.ini file. See About Import and Export .ini Files.