How do I bend this arm (block) so it curves into the torso?
I'm using Cycles and I'm not that good with NURBS curves and all that. Is there an easier way?
Assuming that you want to keep the low level minecraft style you could add an edge loop to the body and extrude the arms. You will need to adjust the weight painting like here:
For smoother animation see also (note my answer on adding a few more loop-cuts in the shoulder region):