To.me its very broad. I think arcade is an outdated term. Forza Horizon 4 for example can't really be called what most would say is a 'sim'. But neither could I identify with it as an arcade game, as the diving still has a lot of depth and a high skill requirement than others, however the game mechanics could be considered 'arcade'.
To me, F1 20xx is a simulation. As it is simulating the sport of F1. Forza Motorsport is a simulation as its simulating driving, ssme with Gran Turismo, Dirt Rally simulates rallying etc, you see what I'm getting at.
To me, the driving dynamics (or what most people refer to as the sim) are separate. Does F1 20xx fully simulate every aspect of the driving physics and dynamics of an F1 car, no, but its an approximation. It simulates what you think an F1 car should feel like.
Then with 'arcade' driving dynamics, again its very broad. Typically I would associate arcade racing with Sega Rally, Daytona USA etc. But to others its Need for Speed/Grid etc. Which yes, don't simulate to the point of being realistic but are an easier approximation.
Finally you then look at the game itself. A game can often be confused as being 'arcade' simply by how you play the game. Forza Horizon again being a good example of this. It has semi realistic driving physics, splashed onto an arcade like experience. Grid is the other way around, a semi realistic career structure based around multiple forms of real world motorsport, with easier accessible driving physics.
It certainly isn't clear cut to me. To often I find that fun is sacrificed in the pursuit of realism, be it a realistic experience or realistic driving. Look at Assetto Corsa for example, as good as the cars handle, the game aspect is almost non existent. Few games have bridged this gap. Forza Motorsport/Horizon, Gran Turismo, get very close to bridging this gap, if they haven't already. And hopefully pCars 3 can do the unthinkable and have something that is recognised as having very realistic driving dynamics layered into a fun underlying game.
My main bugbear with sim vs arcade has been the deluded illusion that harder equals more realistic when this simply isn't true. You see it all the time, oh xyz is too easy to drive etc. Last time I drove a performance car it was quite easy and I didn't crash it. To many thay would indicate real life is arcadey.
Tl;Dr, theres too many variables to categorically say xyz is arcade/simulation as there are multiples within each.
Arcade: Need For Speed Hot Pursuit, Daytona USA, Grid, Burnout, Dirt x
Simualtion: F1 20xx, pCars 2, Assetto Corsa, iRacing, Forza Motorsport X. Gran Turismo X, Automobilista, Dirt Rally x
Note how broad the range in each is. I think they are outdated terms in a modern world.