Arse is the British slang word referring to (1) the human or animal posterior, or (2) a stupid person. Ass is the American equivalent.
Arse is an old word, with origins going all the way back through Old English to the language’s Germanic roots. It was originally an inoffensive and even polite term for the body part, but it eventually became slangy and somewhat vulgar. Today, it has a variety of uses and is embedded in a number of colorful phrases and idioms.
Ass, as most people know, originally referred to a group of of horselike animals. This sense lives on, but ass developed in the 19th century as a primarily America variant of arse.