From the main menu, go to "Friends" and then choose a friend's name. Hit the X button to visit their arcade. In order to play a game in their game cabinet, you will either have to shell out 40 Microsoft Points for a single playthough, or play a game which you already own.
If you want to know which of your friends have a game you own, go to your arcade, choose on of your own games, and go to the leaderboards. Use the LB or RB to scroll to "Friend Rankings".