I'm going to preface this by saying that I like Arraez and really enjoy watching him hit. I still value a guy that is a great on base guy.
But let's be real. He's not an elite player. He's not a great defensive player and he doesn't have a position. His power is limited. The lack of a shift won't impact him at all since, as @chpettit19mentioned, he wasn't getting shifted on in the first place. This is 2023, the three true outcomes rules the game for better or worse. The Twins turned that type of player around and acquired a reliable #2/3 rotation guy capable of 180 innings a year, as @se7799points out, plus a borderline top 100 SS prospect and a lottery ticket. A team can't have too many SS's. They're always valuable as a player or trade bait. To say that the Twins got fleeced in this deal is missing the big picture. As much as it might suck as a fan, it was a very good baseball move.
Luis turning down a contract offer seems like par for the course of a guy that is after a long term deal. That's what happens in a negotiation. Good for him.