Hi, I have a question with regard to wanting to understand the reason behind sleeping bags should have armholes or arms and not be restrained? For example like the love dream sleeping bags which have the arms restrained in an upright position?

There are 2 types of products that you are comparing here.
The Love to Dream bags (& any other where baby’s arms are enclosed/restrained in the bag) you are referring to are a form of swaddling/wrapping. These bags are generally referred to as a swaddle suit/bag.

A sleeping bag is one with appropriate size neck & arm holes( ie arms free) & no hood.
Swaddle suits are not recommended especially once baby is rolling (baby needs arms free & space of a cot when rolling)
Most parents use a sleeping bag when baby is rolling.
See here for info/recommendations about both
https://rednose.org.au/article/safe-wrapping-or-swaddling-when-to-stop-and-how-to-select-a-safe-sleep-bag