Video Arcade

A setting not seen as much these days due to their decline, this is where all the kids used to go to play their videogames. Rows of them, in big, gloriously fashioned cabinets. Often in darkly lit rooms to let the video displays shine and maintained in states from squalid to spit-shined, the machines flash and burble to themselves even when not being played. More recent examples often feature Dance Dance Revolution-style fun.

Special mention must go to arcades as locations in video games.

See also Suck E. Cheese's. Pac-Man Fever optional.

Examples of Video Arcade include:

Anime & Manga

The characters in Sailor Moon often hung out at the the Crown game center. In the live-action series—created after arcades were dead—this was changed to a karaoke parlor.
A video arcade features prominently in Puella Magi Madoka Magica, where Kyouko is proficient in a DDR-esque dance game.

Film -- Animation

A video arcade was also seen briefly in Monster House, in the scene where the main heroes enlist the help of a friend in information dealing with the possessed house.

Film -- Live Action

Tron features an odd mix of arcade machines of the period and ray-traced 3D extravaganzas which could have existed only in the last 10 years.
- Justified since the movie was set Twenty Minutes Into the Future. The sequel assumes it to have been The Eighties, though.
Tron: Legacy revisits the same arcade.
Joysticks, a teen sex comedy.
Terminator 2, where John Connor is playing the slightly anachronistic but thematically appropriate Missile Command.
Big
Double Dragon
WarGames
Arcade (no, really)
"The Bishop of Battle" segment in Nightmares (1983). Most of the action takes place in a video arcade.
The arcade in The Wizard (film), perhaps best known for the infamous "He touched my breasts!" scene.
Never Say Never Again has an arcade apparently sponsered by Atari, as it contained virtually nothing but Centipede
The Karate Kid

Literature

Time Twister by Ged Maybury has many scenes set in a video arcade, as the eponymous game machine is the device around which the plot is built.

Video Games

Maniac Mansion has the arcade-in-game version.
The paradigm for Xbox Arcade Live.
Both EarthBound and its sequel Mother 3 have arcades in Onett and New Pork City, respectively.
There's a plot-relevant one on the wharf in Wishbringer.
In Mario & Luigi: Superstar Saga, the brothers can visit an arcade in Little Fungitown.
In the Tokimeki Memorial series, the Arcade Center is a staple dating location.

Western Animation

The Simpsons: Bart will still occasionally hang out in one, playing such games as "Escape from Grandma's House II" and "Hockey Dad". In a Flash Back episode to the early eighties, a group of kids go play a video game version of "Kick the Can", and a Mumbly Peg arcade machine can be seen in the background.

Real Life

Video arcades remain popular in Japan (where they are known as game centers).