How does Oates mix the real with the fantastic in this story? Who is Arnold Friend? What is the significance of his name?

The encounter between Connie and Arnold Friend at the end of this story does have some fantastical elements. It has been said that Friend is, on some level, a symbolic character and a sort of composite as well. The name "Friend" refers to a number of things, one being the character's embodiment of popular music, which Connie is obsessed with. Music is something that helps her become who she wants to be. As the story says, she has "two sides" that represent who she is at home and who she is elsewhere. Music is a "friend" that understands and supports her. Her family does not like her music and tell her to turn it down. The story's dedication to Bob Dylan signifies its connection to popular music and the spirit of rebellion that Dylan's songs and persona represented to youth culture.
Friend is someone from the "other side" of Connie's home life; she meets him when she is hanging out one night with her friends. When Friend shows up at Connie's house, these two sides, these two worlds, meet for the first time, and Connie is unsure of how to connect them together. The door that stands between her and Arnold is a symbol of the safety of her home and the divide between her family life and the life of freedom, expression, and exploration that she craves. The screen on the door is also a symbol of her virginity (this is a common trope in coming-of-age literature and film).
The fact that this man is named "Friend" is also meant to allay Connie's fears about exploring her sexuality and rebelling against her family's attitudes about her encounters with boys. When she opens the door to go for a ride with him, she merges the two sides of her world: home, safety, and innocence merges with life, danger, and exploration.