Indeed it's possible in theory to do flag planting without arxiv, for example by posting a timestamped technical report to an institutional repository, but it has never been a common thing. Probably because you don't get much of an audience, so people won't cite you unless you bug them in reviews. And if someone publishes the idea some months later in a paper, they will probably get credit as there's the reasonable assumption they just hadn't read your report.

On the other hand, arxiv has a huge audience, lately maybe even more than DL/NLP conferences, making the flag planting really effective, especially if you are from a prestigious group. So there is a real problem now with large, prestigious groups posting half-assed preliminary results in arxiv, and deterring more modest groups from working on the problem or bogging them down because they now need to compare themselves to the well-known arxiv approach, which often has serious reproducibility issues because it has not been peer-reviewed.

I'm not an arxiv hater, in fact I check arxiv every day and for the last year or so I have posted most of my papers in it. But the problem is real and something must be done. Not about arxiv which is just the messenger (and a good one), but about the flag-planting culture using it that has emerged in the field.