Arhat means worthy one, and in Theravada teaching it names the person who has done what was to be done. The defilements of greed, hatred and delusion are destroyed at the root; the ten fetters that bind beings to rebirth are severed; and at death there is no further becoming. The canonical formula is that birth is exhausted, the holy life fulfilled, and there is nothing further beyond this.
The path is described in stages, and the tradition is unusually precise about them. A stream-enterer has broken the first three fetters, including the view that there is a self, and is assured of awakening within seven lives at most. A once-returner has weakened sensual desire and ill will and will return to this world once more. A non-returner has abandoned them and is reborn in a higher realm from which awakening follows. The arhat has cut the last five, including subtle conceit and the residual restlessness that survives even a very advanced practice.
The distinction from a Buddha lies in discovery, not in attainment. A samma sambuddha rediscovers the path in an age when it has been lost and establishes a teaching; an arhat follows a path already laid out and taught. Both are fully liberated, and the Pali texts apply the word arhat to the Buddha himself. On the Theravada account there is no third thing they might have attained and did not.
The path is also, on the tradition's own showing, extremely demanding, and Theravada societies have long organised around a division of labour: monks pursue the goal directly, laypeople support the monastic community and cultivate merit and moral conduct, with a better rebirth and eventual liberation in view rather than awakening in this life.