The here is the same as the one in "another one".
In your example sentence, [he] is scratching off his head with one arm. **The other** , shaking arm [was trying to swim in the air or whatever].
So, means "the other arm" (as opposed to "the one arm").
This can be used with arms, items, people, anything. Like
> ****
> I saw two men. One wearing a hat, the other one with a walking stick.