As Nephi continues his exegesis of Isaiah, he develops an argument designed to show how the acts of God will effect the great changes that have been predicted. Nephi expounds that the blessing of all of the earth under the spiritual fatherhood of Abraham will come only after the Lord has demonstrated his power and reach to the children of men. The image that the Lord will "make bare his arm" indicates that the Lord will do something that will indicate to the world his involvement in the lives of his children.
In verse 11 Nephi explains that this "making bare the arm" will first consist of bringing the gospel to all people, including those who are of the house of Israel. After this preaching, the Lord will further display his concern and care by bringing Israel out of captivity (verse 12) and gathering them again to the lands of their inheritance.
Even at the time of the translation of the Book of Mormon, this was a prophecy of the future. We live in a time when we have seen it fulfilled, when there is again a nation of Israel in its traditional lands. The Lord's efforts to "make bare his arm" have been begun, and our efforts to continue to spread the gospel continue to spread his word among his children. While much of this prophecy has been fulfilled, there is more, and we are to be the agents of its fulfillment.