Thanks, Vero. I removed the latest version of Dropbox and downgraded to their recent non-beta release and everything is back to normal.
For the wider community, it appears the cloud storage providers (at least Microsoft and Dropbox) are trying to adjust to MacOS's new APIs. Along with this, Dropbox is testing also testing M1-native software for the first time. There's more discussion on the Dropbox forums.
So, there are a few things going on right now and hopefully the versions will stabilize over the next few months. Doesn't appear to be an Arq issue!
Thank you.