Arbitration is a mini-trial without a jury. It can be binding or non-binding. In binding arbitration, the arbitrator's decision is final. The arbitrator makes a decision and determines the appropriate damages, if any. In non-binding arbitration, the opinion is merely advisory.
Arbitration is a more formal process than mediation, but less formal than a trial.
Medical documents and police reports usually are adequate documentation. The arbitration decision is communicated to the lawyers in a few days. Sometimes arbitration is required. Some vehicle insurance policies require that any disputes be resolved by arbitration instead of a lawsuit. If you were involved in a car accident, look at your policy to determine whether arbitration is mandatory.