I'm still doing the campaign in beginner mode.
I'm starting to realise the value of the arena. Free xp and gold without losing time.
It seems to work very well for commanders, who can keep their troops alive thanksto superior numbers. However, if I send mages or warriors to the arena, they tend to lose the troops they've been trying to level up.
I feel it's better to send a commander in the arena and the other classes out there scouting and picking their fights.
am I missing something?

Arena is great for backward leveling.
First hero babysit troops in fights, level them to 10+, gives them medals, picks Tier 2+ units and gives veterans to fresh heroes. These veterans can take even on occasional T3-T4 units.
Once I had fight where enemy 5 level mage casted "Summon Phoenix", I won that fight without casualties(thanks to spider).
If you find something like Sword of blood (+10/+9, 40% lifesteal), you can send solo warrior with 0 level.

It is very hard to save troops in Arena - some heroes/ warlocks can oneshot your units and rise skelly from body = impossible to revive.
If you want to dominate arena, you need to use something like this(not mine): http://www.youtube.com/watch?v=gWE7HCDUHTE

Holy crap, 2 months of playing this game and I never even had to close to such an army! This game is incredible.

Level of opponents based on level of your hero.
In novice league they can have lower level, in veteran league they will have higher level than your hero.
As for items, spells and troops - completely random.
This means that you can meet lvl5 mage with summon phoenix/vampire/devil spell, level4 commander already can have T3, something like ghost or troll or level1 warrior in drake set (immune to magic)

As for lack of documentation - author prefer roguelike approach.

Spectating can also be a good gold earner if you've not got a ready army or hero capable of taking on the arena itself. A gamble to be sure, but it can be worthwhile. By assessing the two heroes pitted against each other, you can sometimes guess outright which is most likely to win.

Yeah I would say that 80-90% of the time you choose the Commander base, or secondly the Commander spliced Hero. What I really really hate though is when they give you 2 of the same hero with no info to differentiate them.

Also I hate how stupidly the computer decides to use it's spells. I mean I cast sleep on the enemy Hero then proceeded to attack it with a weak as hell unit so that it had no effect for crying out loud. And it's Enchanters for some reason never cast MASS spells on themselves or the enemy to give their massive army a boost. They will instead very early on use the crappy Magic Weapon spell on a T1 or T2 guy and not even one of their T3/4's. It's just ridiculous how stupidly it fights a lot of the time.

You can also become arena champion and get a sweet artifact as reward. This is hard to do though...you have to win a bunch of Champion League battles, then beat the current champion. For those of you who haven't done it yet, I'll let you discover who that is on your own.

Is that the mysterious "Orcoyen" I read about on the russian forum? Check out this guys incredible setup to defeat the champion level 30 without loss everytime,took him like 600 turns:

http://translate.googleusercontent.com/translate_c?depth=1&hl=de&rurl=translate.google.de&sl=ru&tl=en&u=http://eador.com/B2/viewtopic.php%3Ft%3D1841%26postdays%3D0%26postorder%3Dasc%26start%3D30%26sid%3D0af524f52f27e049db710e009ca93ec1&usg=ALkJrhhbqHlPH5P_hvHFe1w4ql_F6cFo9A

The picture I meant is in the bottom, scroll down.

Mysterious champion - Orca (winner of second offline championship)
http://eador.com/B2/viewtopic.php?p=10050#10050
Because of him was added "No labyrinth" rule to next championships - he got treasure without guards 2 times in first 30 turns.

He made video with this army in action.
http://www.youtube.com/watch?v=gWE7HCDUHTE

Edit: ew, already posted this :\

Pretty cool that the contest winners get rewarded with ingame names, thanks for the info.