This is (or at least WAS) the correct answer. Now that people have jump ranges bigger than the default zoom level, it may well appear to always highlight all systems.They are an indication of what systems you can jump to in one jump, given your current jump range, from the system you have currently selected (i.e. not your current system).
Example: Your jump range is 45 ly. You are in system A, system B is 40 ly away from you, and system C is a further 40 ly straight away from B:
A ...40jy... B ...40jy... C
If you select / hover over your current system (A), B will have an orange arc but C won't,
If you select / hover over B, C will gain an arc.
In ye-olden-days it was usefull for navigating sparse regions so you could map a route in advance IN GAME. Nowadays people just use Spansh to follow someone elses route.