The “arbitrary” part is a force of how rather than what programs are run.
Is your Smalltalk code running by compiling it into the OS? Is it loaded as a library? Can I write a C backend to output an indistinguishable library? In the latter cases, it is still capable of running arbitrary code - you may just be choosing not to.
You can still write code in a different language like C that will compile into Smalltalk VM bytecode. You will never be able to run any arbitrary code, just the one compiled for your machine. And in this case, the machine is virtual (but does not need to be). Symbolics Lisp machines were able to run Pascal as well, for example.
