What could be the cause of a weird rash on back of arm?

Keratosis Pilaris. The most common cause of rash on the backs of the arm is keratosis pilaris. It is found in 50% of the population and presents as fine bumps with surrounding redness. It can also be seen on the sides of face as well as thighs. There are no great treatment options. I would recommend seeing a dermatologist if you want to have a definitive diagnosis. Other causes could be eczema or tinea versicolor.