I think what he means is that Arteta has a system that he wants to play and he only has this group of players to choose from - Xhaka is currently the best fit we have for one of the roles within that system, so that in itself makes him essential right now.
It doesn't mean that we can't find / shouldn't look for a better, more dynamic option at some point - it's more about pragmatism for the moment. My gut-feeling is that he will also end up leaving in the summer - regardless of how much Arteta likes him as a player, or whether he can coach him back to some kind of usefulness, I just think his relationship with the club and the fans may be too far gone at this point. What we're seeing at the moment is probably some kind of mutually-beneficial agreement between the player and the club / manager to hold off until the summer: the player gets to build his reputation back up for 5-6 months with the hope of attracting some better offers; and the club don't lose a senior player that we wouldn't be able to adequately replace half way through the season (and might be able to get a bit more for him, if he looks a better player by the summer).