URIs identify and URLs locate; however, locators are also identifiers, so every URL is also a URI, but there are URIs which are not URLs.
Examples
This is my name, which is an identifier.
It is like a URI, but cannot be a URL, as it tells you nothing about my location or how to contact me.
In this case it also happens to identify at least 5 other people in the USA alone.
- 4914 West Bay Street, Nassau, Bahamas
This is a locator, which is an identifier for that physical location.
It is like both a URL and URI (since all URLs are URIs), and also identifies me indirectly as "resident of..".
In this case it uniquely identifies me, but that would change if I get a roommate.
I say "like" because these examples do not follow the required syntax.
Popular confusion
From Wikipedia:
In computing, a Uniform Resource Locator (URL) is a subset of the Uniform Resource Identifier (URI) that specifies where an identified resource is available and the mechanism for retrieving it. In popular usage and in many technical documents and verbal discussions it is often incorrectly used as a synonym for URI, ... [emphasis mine]
Because of this common confusion, many products and documentation incorrectly use one term instead of the other, assign their own distinction, or use them synonymously.
URNs
My name, Roger Pate, could be like a URN (Uniform Resource Name), except those are much more regulated and intended to be unique across both space and time.
Because I currently share this name with other people, it's not globally unique and would not be appropriate as a URN. However, even if no other family used this name, I'm named after my paternal grandfather, so it still wouldn't be unique across time. And even if that wasn't the case, the possibility of naming my descendants after me make this unsuitable as a URN.
URNs are different from URLs in this rigid uniqueness constraint, even though they both share the syntax of URIs.
Best Answer
Edit : To answer your question points directly.
[1] Yes they will work fine due to Internationalized Resource Identifiers.
[2] If you are targeting Arabic search results then yes having arabic in the url bar is good for SEO. I am sure Google does clever translation stuff tho as well.
[3] Copy pasting the URL will look funny due to [1] If you look at Arabic wikipedia and try copy paste their url somewhere you will see what I mean.
More information
I know Google does put some weight into what is in the url so for example having page-title.aspx will be better than pagetitle. I would imagine that the same rules apply for having foreign language urls - it will help increase results when people are searching for terms that are included in your arabic word.
Most browsers will deal with it fine I don't think you need to have a special language pack installed. Arabic Wikipedia works fine though the characters get mapped using Internationalized Resource Identifiers.
https://webapps.stackexchange.com/questions/15539/how-do-special-foreign-language-characters-in-an-url-work-and-are-they-fake
So will look fine in your url bar but will look like this http://ar.wikipedia.org/wiki/%D8%A7%D9%84%D8%B5%D9%81%D8%AD%D8%A9_%D8%A7%D9%84%D8%B1%D8%A6%D9%8A%D8%B3%D9%8A%D8%A9 when copied.
I always liked how backspace and delete work the other way around with Arabic text.