Can I improve the idea of the paper on arxiv and publish it again?
arXiv is a public repository/a preprint server for research papers (that are either under review or currently being worked on. There are other such servers hosted by publishing houses as well like Elsevier's SSRN or MDPI's preprints.
In accordance with your question to the following paragraph:

On a related note, unrefereed on-line pre-prints are not assumed to constitute “prior work” – in other words, reviewers cannot penalize an HPCA submission because it does not cite a pre-print with limited visibility.

What they are trying to convey is that, if a paper (an online pre-print i.e., present on any of the public repos/databases) is somewhat relevant to the topic you're targeting in your paper and you don't cite the paper in the related work/prior work section you won't be penalized for it or asked to do so. The reason they don't consider arXiv prior work is clear that the PC is strictly adhering to papers that are rigorously peer-reviewed and published by a journal.
Also, it clearly does not indicate that you can plagiarize anyone's work.