CALL YOUR VET ASAP. The following information is NOT from a medical or veterinary professional. It is based off of human physiology and doesn't necessarily apply to other mammals. I cannot guarantee the accuracy or effectiveness of any information that follows.
They have somehow moved around and the needle has fallen out of the vein, but remained in the body. Nobody has noticed and for a few hours water has accumulated like a balloon in the arm.
This is called "infiltration":
Is it dangerous?
It can be, depending on what was in the IV.
If untreated, would the body absorb the water, or would it remain as a balloon / pocket? If a pocket of water forms, what is the treatment?
Taken from here:
"If the infiltration is severe, you may consider the application of a compress in addition to elevating the affected limb. Check your institution’s policy regarding which type of compress (warm or cold) should be applied. Generally speaking, if the infiltration solution was isotonic, a warm compress is used to alleviate discomfort and help absorb the infiltration by increasing circulation to the affected area. However, sloughing can occur from the application of a warm compress to an area infiltrated with certain medications such as potassium chloride. In certain situations, a cold compress is recommended."