How Does a Sudden, Large Price Increase in One Token in a Liquidity Pool Trigger Arbitrage?

A price increase in Token A makes the pool's ratio (Token A / Token B) cheaper than the external market price. Arbitrageurs buy the cheaper Token A from the pool using Token B, which reduces the supply of A and increases the supply of B in the pool.

This action drives the pool's internal price of A up until it matches the external price, thus rebalancing the ratio and realizing the impermanent loss for the liquidity provider.