It means to have the appearance or consistency of sand. Unlike sabulous and its close relative arenose, both of which also refer to something sandlike and which rarely appear outside lists of rare words, arenaceous is still very much with us.
But it’s a term you’re most likely to find in a deeply technical article that discusses matters such as “the influence of matrix conduction upon hydrogeophysical relationships in arenaceous aquifers” or refers to the “squamulose lichen of both calcareous and arenaceous soils”. The rest of us can make do with sandy.
If its spelling reminds you of arena, a public entertainment space, that is no accident. Both derive from arena or harena, the Latin word for sand. The English word arena comes from the name for the central part of a Roman amphitheatre in which gladiatorial fights and the like took place and which was strewn with sand to absorb the blood.
Very rarely you may find arenaceous used figuratively. James Russell Lowell did so in Among My Books in 1876 when writing of William Wordsworth: “He seems striving to bind the wizard Imagination with the sand-ropes of dry disquisition, and to have forgotten the potent spell-word which would make the particles cohere. There is an arenaceous quality in the style which makes progress wearisome.”