Specifically, Microsoft says it is supporting Modern Standard Arabic, a language used in the Middle East and Northern Africa; while there are many localized dialects of the language, Microsoft notes that MSA is what's taught in schools and used by journalists. Arabic joins seven other languages that are currently supported by Skype's live translation feature: English, Spanish, French, German, Chinese (Mandarin), Italian and Portuguese (Brazilian).
Technically, you can translate your speech between any of those languages, but Microsoft says that it works best by far between English and another language. Over time, as Skype's machine learning techniques are exposed to more and more usage, other languages will get better, but for now your best bet is English to Arabic (or one of the other seven languages Skype supports).
To use it, you can just turn on Skype translate in the Skype for Windows desktop application by clicking the globe" icon in a conversation and turning it on. For now, the feature is only available in the Windows application; Mac users and mobile users are sadly left out. But if your language of choice isn't currently supported by Skype's live voice translation, it's worth nothing that there are a total of 50 languages supported in the app's text chat translation feature. But again, you'll need to use the Windows desktop app.