The Arc Reactor is a special reactor that produces arc energy making an alternative energy source for the benefit of mankind.
The huge Arc Reactor was seen at the Stark Tower where it provides unlimited energy in the entire city.
Its history is unknown but it is possible that Tony Stark was able to build that in hoping to replace the nuclear fuel and petroleum oil as the most useful energy source for the world before he ever built his miniturised arc reactor in his chest that led to his rise as Iron Man.
The Arc Reactor can also power up the Iron Man armors so greatly that it may be possible for Iron Man to blast a massive uni-beam at villains.