This city, part of the ancient lore of the Book of Notch, is ficticious, and cannot be found in Minecraft.
The city of Arabus began as a humble village, as with all human civilizations. This village was one of the first places in which farming was established, and over the centuries it became the hub of a vast kingdom in the middle of The Continent. As it is so ancient, no one knows how it came to be or who founded it, but it is unquestionable that it plays a great military role in the history of Minecraftia according to Notch.
Arabus, around 600 years after settlement, was a large town, ruled by an ambitious priest who hoped to conquer neighboring villages. Arabus launched a risky campaign to establish a small empire at this time, and around 800 years after settlement, it had asserted itself as a continental power, and had replaced its theocracy with a more stable monarchy. According to records of the time, the first king, King Adam, promoted trade, and soon transformed his kingdom into a prosperous empire.
About 1000 years after settlement, a uniform written language had been established, and Arabus a great city. The nobility and the aristocracy of the Arabian Empire (not intentionally identical to our Earth's Arabia) kept written records of the history of their kingdom, and, after this, the timeline of Arabus and its territories become very detailed.
The Great War
At the time of the Great War, Arabus was the greatest kingdom of Earth, and therefore fought valiantly against the forces of Herobrine. However, the empire's borders were broken through and within years the armies of Evil were laying siege to the walled city of Arabus itself, the last great stronghold (no relation to generated structure "stronghold" in Minecraft) of human resistance. It was at this moment that Notch and his friends returned from their dimension and led their army to victory in the First Battle of Arabus.
After Notch secured the city of Arabus, he established his council in the city palace, and from here his armies were commanded. When the armies of Evil once again penetrated into the heart of the empire, Notch brought his son Steven to the front and together they leveled Herobrine's forces, and within years succeeded in defeating Herobrine in the Great War.
The Return of Herobrine
Upon the summoning of Herobrine, Arabus lost many lands to his control and, at the beginning of the Second War, most of the empire was overrun by Herobrine's blitzkrieg within weeks. The empire fell (in terms of government and unified military) in the year 1992 after Notch fled Earth due to the death of Steven on the battlefield, and all signs of unification except for in the Kingdom of Jeb vanished by 1994.
Currently, the city of Arabus is in a state of disrepair, although its central districts have been maintained by Herobrine in order to establish it as a capital of Herobrine's worldwide empire.