Arlo doesn’t communicate directly to the smartthings hub, it’s a cloud to cloud integration. In addition to turning your phone off, you should also be able to take your smartthings/Aeotec hub off power and have the integration still work.
So the problem should be in the “smartthings connector“ in the diagram I posted above. Somewhere in the communication between Arlo and smartthings. 
At this point, over 90% of smartthings customers don’t have a smartthings/Aeotec hub at all. They have a Samsung appliance or television and some Wi-Fi devices. But they still use the smartthings app and most integrations are cloud to cloud.
Arlo converted to using the new “schema“ architecture a few months ago. But that was just going from one cloud to cloud integration to a different cloud to cloud integration. No hub required on the smartthings side.
SmartThings Schema is the fastest method to connect your cloud devices to SmartThings using AWS Lambda or webhook endpoints.
Arlo has been making changes to this integration since it was introduced, mostly to add additional devices, and it looks like something they did a few weeks ago broke the motion integration. 