Arena
The Arena is a combat pit inside the Old Camp. It is used for reputation fights between convicts and for organised spectacles that draw the camp's leaders and Ore Barons as an audience.
Expanded in the Remake
Alkimia Interactive has publicly confirmed that the Arena is getting more use in the remake than it did in the original Gothic. New quests are attached to it, including fights against animals rather than just other convicts. That turns the Arena into a secondary progression channel for combat-focused builds, alongside the regular questlines.
Role for the Hero
For a Nameless Hero who commits to a pure fighter path, the Arena is one of the cleanest ways to raise in-camp status. Wins earn gold, reputation, and occasionally gear, which complements the progression coming from the regular trainers and quest chains.