Daas,
The standards of daas yehudis (which governs most of tznius) depend on the norms of the society a women is in. If in her society it is normal for a women to uncover her arms in front of other women, that would be mutar. On the other hand, if in her society it is normal for a women to wear a burkah, then she must wear a burkah as well.
Hair covering is different. No matter what society a married women lives in, she must cover a portion of her hair (covering all the hair is daas yehudis). Even if one lives in a society where hair is not erva (as R’Moshe held was the case in America in the 60s), there is a still a chiyuv to cover.