ArXiv is a pre-print server. A pre-prints is the version of an article before it is submitted to a scientific journal and will be peer-reviewed. Sometimes it's also called First-Draft or Submission Version. If peer-review ends with major revisions, the pre-print is still the pre-print.
Publishing the post-print, which is the version of the article accepted for publication, is something different than publishing the pre-print. It includes all modifications and revisions of the peer-review process but is not in the journal layout. Sometimes it's also called Final-Draft-Post-Referee(ing) or Authors Fulltext.
Before uploading your pre-print to arXiv you should check whether the journal you chose allows pre-prints on arXiv. If so, go ahead and upload your pre-print.
Before uploading the post-print, e.g. on your personal website or your institutional repository, you should also check the journal guidelines.
In principle, a pre-print can be modified on arXiv: "To replace an article". There is a versioning of the articles but this feature is mainly used for minor corrections as typos.
Edit: Someone mentioned that it is common to upload the post-print as new version to arXiv. I couldn't find a direct statement on arXiv about this but there is a study comparing arXiv articles with their final published versions. The authors found that 35% of all arXiv articles have more than one version and their comparison implies that the latest versions are more close to the final published versions, i.e. there are post-prints on arXiv or the review processes don't modify papers that much. Here is another source confirming post-prints on arXiv to be common. I just couldn't verify the mentioned encouragement to do so.