Prefabs are one of the most powerful tools you'll come across in Unity. They come in handy not only in level building but in scripting as well. Think of prefabs as GameObjects that can be saved and reused with every child object, component, C# script, and property setting intact. Once created, a prefab is like a class blueprint; each copy used in a scene is a separate instance of that prefab. Consequently, any change to the base prefab will also change all of the active instances in the scene.
The arena looks a little too simple and completely wide open, making it a perfect place to test out creating and editing prefabs.