I've only been there once but here's what we did...
There were three of us on an initial visit to see the sights in Maj'Dul. First we stopped at the NPC nearest the entry door to the arena and purchased a few of the arena champions available there, (he has 4 to offer).
One of us, (I think it was me), made a room and we all entered. It is an instanced zone so the 3 of us were all alone in there. We chose up sides, playing 2 on 1 for fun.
When you create the room, you pick the variables for the game you want to play. You can set the game itself as well as the victory conditions, (number of points, time limit, champions or characters etc.)
After entry, everyone begins in a "ready room" and when the clock ticks down you can enter the arena and play till the timer runs out or one team wins. btw - each time you die, you are returned to the ready room and there is no penalty for death.
There are tiny red and blue glowing potions all over the floor of the arena that restore either power or health when you run over them. There are also temp spells that can be aquired in the same manner.
We played for more than an hour and had a ball! I think it can potentially be great fun as a guild event or if your group wants to unwind say after a hard dungeon trek. I don't see a lot of potential for pickup battles or imprompteau duals between strangers...
Hope that helps...