The sign indicates that the notes of the chord before which it is placed should be played quickly, one after the other, beginning at the lowest note, on the beat; all the notes, after they are struck, being held down during the value of the chord.
When the arpeggio is written in small notes, it still begins on the beat, but the small notes are not held down.
The above rule as regards the arpeggio commencing on the beat, does not always hold good, especially when the small notes are written before the notes of a cantabile melody.
The downward arpeggio is usually indicated with an arrowhead indicating the direction of the arpeggio . It is played as follows:
For clarity, sometimes an arrowhead is also applied to an upward arpeggio.
When (in old music) chords are marked with the word "arpeggio," all the notes of the chord should be played rapidly one after the other, both up and down several times ad lib.