Short answer: Yes, you can play M-rated (ESRB) / 18-rated (PEGI) games on an Xbox 360 Arcade—if you meet the hardware requirements.
| Scenario | Works on Arcade? |
|---|---|
| Disc-based 360 M-rated game (CoD, Gears, etc.) | ✅ Yes (disc spin) |
| Original Xbox M-rated game (Halo 1/2) | ❌ No (needs HDD) |
| Large DLC / Title Update >512MB | ❌ No space |
| Digital purchase (Games on Demand) | ❌ No space (usually >4GB) |
| Parental Controls | ✅ Yes |
Bottom line: Play disc M-rated games freely. Add HDD for installs/BC/DLC. Or upgrade to Series S.