Jan, an ‘oracle’ in the context of crypto is an agent that feeds real-world data to a blockchain. Maker uses it, for example, to know the value of your collateral at any time.
You are right that a bot (an automated program) can perform arbitrage. Almost all price arbitrage that can be automated is automated at this day and age, in crypto as well as other financial markets. The problem with Dai arbitrage is not that it can’t be automated, but that it’s not profitable to do it in the first place, automated or manually. If you automate something that loses you money, you only go broke faster.