Arnold confirmed Seattle Sounders defender Smith was unable to travel, though he was well and hadn't shown any symptoms, and noted it was one of the challenges of picking squads in the current climate.
"He's not in the squad because he's got COVID," Arnold told reporters on Saturday. "He tested positive only two days ago, so he's out of the squad for those reasons.
"... It's quite stressful that even though you select the squad, the players get picked, they come in and they've got to wait for their (coronavirus test) results and you've got to wait for it to be a negative before we can actually see them, and then we move on."
It's a setback for Smith, 27, whose 56 minutes against Vietnam last month was his first Socceroos appearance since November 2019.
Paul Izzo, Ryan Strain and Bailey Wright also drop out of the 25-player squad, with Chris Ikonomidis and Fran Karacic returning. The Socceroos hope Ikonomidis -- one of two A-League Men players attending along with Rhyan Grant, who has been training in Scotland - will be able to self-isolate at home instead of hotel quarantine upon his return to Melbourne.
"He's in great shape. He's been working hard at Melbourne Victory - he wasn't in physical condition for the last camp," Arnold said. "... He wants to be here, he wants to come to this camp.
"It would be great if the Australian government and the Victorian government could help Chrissy when he goes back to Australia after this camp with some self-isolation."
The Socceroos face Oman in a 'home' match in Doha on Oct. 8 before travelling to Saitama for a match-up with old foes Japan on Oct. 12. Oman defeated Japan in the opening round of qualifiers and victories in these two matches would put Arnold's men in a strong position to claim one of the two automatic qualification spots for the 2022 World Cup.
"At this moment in time, it's all about the first game against Oman and getting ourselves ready for them and getting three points against Oman," Arnold said. '
Meanwhile, Arnold was delighted former Mariners midfielder Gianni Stensness had switched allegiances to Australia after playing for New Zealand at the Olympics.
"We're just waiting for the paperwork from FIFA and then we can bring him into the squad," he said.
Dinamo Zagreb's Deni Juric, the younger brother of Socceroos striker Tomi, is currently weighing up whether to commit to Australia or Croatia.
The younger Juric, 24, is currently dealing with an ankle injury, with Arnold anticipating a call on his international future at the end of his four-week recovery - while emphasising he would "never force a decision".
Socceroos squad: Daniel Arzani, Aziz Behich, Martin Boyle, Milos Degenek, Kenneth Dougall, Mitch Duke, Callum Elder, Denis Genreau, Rhyan Grant, Ajdin Hrustic, Chris Ikonomidis, Jackson Irvine, James Jeggo, Fran Karacic, Awer Mabil, Ryan McGowan, Riley McGree, Aaron Mooy, Tom Rogic, Mat Ryan, Trent Sainsbury, Harry Souttar, Adam Taggart, Lawrence Thomas, Danny Vukovic.