Villa had two bids for the England Under-21 international turned down in the close-season as they looked for a replacement for Jack Grealish.
Arteta insisted he was never worried Smith Rowe would leave the Emirates Stadium and he is pleased with the increased dedication from the youth academy graduate on and off the pitch.
"When you want to take the game to the next level, when you become a real important player in such a big club, that should be the only priority and every detail is important and relevant," Arteta said.
"You have to make him aware of that, you cannot give percentages away that can make big differences and he has changed that.
"Credit to him and obviously the staff here that are all the time monitoring and build that education with him and he'll only get better.
"He should demand that in his game because he is capable of doing it. I'm pleased that is developing. He still needs to develop more in other areas as well.
"There is no complaining, he is just looking forwards, he is really determined, he has changed the way he is living as well a little bit and some of the habits that he had and he's been superb."