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Source Media Arcade is an all-in-one media center experience for your PC. Shortcuts to your files, games, and movies appear as full-sized arcade cabinets, hand-held tablets, or mounted view screens. You access your media items simply by walking up to them and pressing the USE key. In version 2, you are able to play in MULTIPLAYER mode where your friends can come join in on the fun.
The next update of the mod will significantly enhance your ability to install and use add-on content intended for other Source engine games & mods. You will simply place the addon's ZIP file in your "addons" folder and it will be installed automatically.
Does this mean just maps, models, etc? Or full LUA?
Just maps and models, etc. LUA scripts are installed, but it is unlikely that SM Arcade will ever be able to execute GMod LUA scripts.
Half-Life 2 weapon mods are functional though.