What do the "action" and "arcade" categories mean to people? Looking at the top apps in these two categories, these categories appear to be redundant, as the vast majorities of games are listed in both.
"Arcade", to me, means something where you play little sessions and go for a high score, see how long you can survive, etc, like the physical arcade cabinets of the olden days. If you can almost picture the game as being quarter operated, then I think it fits under Arcade. It's hard to imagine an arcade game that isn't also an action game, and Apple has you select two categories for each app submission, which would explain the redundancy. I'd say that whil almost all arcade games are action games, but only some action games are arcade - there are action RPG's, action adventures, etc.
Heck, there really is no point in the categorizing games, you'll find a puzzle app in like 5 categories!
A game is classified using whatever the devs assign to it. Sometimes devs just try interesting categories to get out of the way of major releases by EA or Gameloft... Sad but true... We're guilty of it too, putting our game in "Entertainment" instead of "Games".
Unfortunately that can backfire...and your game will be noticed less. For example, I always try and keep up with the new realeases via Appshopper, but only watch the "games" category. If it's not in that category, I won't see it. (Don't want to have to wade through all the "entertainment" apps just so I don't miss out on a miscategorized game. ) I think a lot of other people probably use filters, too, so that they only see the categories they are interested in. Just a thought...
i think that if a game is arcade, it is automatically action. but if a game is action, it is not necessarily arcade.