I'm not sure I agree with the description of arbitrage as "riskless". The arbitrageur is accepting the risk that the arbitrage opportunity will go away in between the buy and the sell. This is true whether you're arbitraging salt via caravans across the Sahara or arbitraging currencies in millisecond trades.

It's the idea of simultaneous transactions that makes it riskless. Whether millisecond forex trades can be modeled as "simultaneous" is another question.

Yep. Also have counterparty risk. Just because you have a contract for a purchase and a sale doesn't guarantee that the transactions will go smoothly.

If you want to get more precise, the benefit of simultaneous or near simultaneous transactions is reduced risk that prices will fluctuate. Arb is just an exploitation of different prices in different markets.

> It is usually used to describe a riskless transaction.

In the academic sense, yes. In reality, no.

> Purchasing something and reselling it later for a higher price is not arbitrage.

Correct. It's called, "market making".

No, having fixed prices with a spread is market making. Taking other peoples offers is not market making.