He is a merchant, selling Weapons, Armor and Smithing supplies. His shop is in an alcove on the north wall. It contains a forge, grindstone and workbench. It is also possible he is the prisoner wanted for execution by Solitude in Imitation Amnesty.
Weapons, apparel, and misc: Arnskar's inventory is pretty standard for a blacksmith. That being said, there is still a good selection in quality and quantity no matter what you might want to smith.
"Looking for the best smith in Skyrim? You found it."
"Need your weapon repaired? Or can I interest you in a new one?"
"They don't call me the Ember-Master for nothing. What do you need?"
- The Elder Scrolls V: Skyrim (First appearance)