From what I've seen, a lot of it has to do with extension- allowing yourself to reach with your arms, to move them around way out, because it looks a lot better.
For pretty hands, it's often with the first, third and forth finger (so pointer finger, ring finger and pinky) extended out, though relaxed, and then the middle finger is pointing slightly down from those. The thumb is also pointing forward, but relaxed.
It's... sort of hard to describe...
You could do a Google search for "ballet hands" in the images, and you'll find some good pictures. This is also often used in things like belly dancing, as well. I'm not super sure of the picture links on the forum yet, so... yeah.
For graceful arm movement, I find that it's like an "arm wave" the same way we do a body wave. Shoulder, then elbow, then wrist and then fingertips. Often it's done a bit faster and less exaggerated as the body wave.
I would say, best way to get a feel for it is to look up lots of pole dancers you really like, and watch just their arms. See what they do, see when they do it, learn about the movements. You could also look for belly dancing and such, because graceful arms are things almost all dancers strive for!