profit extracted by arbitrageurs is effectively removed from the pockets of liquidity providers,
This statement is 100% provably false.
In fact it is a nonsense statement.
A total impossibility.
They are just showcasing a particular process where an arbitrageur uses a pool.
uh no...
resulting in impermanent loss.
They are saying this is what causes impermanent loss.
I don't understand how you are interpreting this in their favor.
Yes I agree.