Pacman is the package manager application used by ArchLinux.
Pacmans config file is located at /etc/pacman.conf. Pacman uses different repositories of files. These repos can be added to your system through the pacman.conf. By default, pacman uses 3 repos; core, extra and community. There are a lot of mirrors for pacman across the globe, pacman uses the /etc/pacman.d/mirrorlist file to determine which mirrors to use. The speed of pacman greatly depends on which mirrors you choose. Pacman uses wget by default, but you can specify alternate downloaders (like aria2 for simultaneous mirror downloads) in the pacman.conf under the XferCommand = option. Pacman keeps a local database of available and installed package descriptions. Each day you should sync your local database using the pacman -Sy command, this is like debians apt-get update or aptitude update. Now your local database will be updated and any package you install with pacman -S xxxx will be up-to-date (as long as your mirrors have the latest package).
It seems that pacman syncs its local database with the first mirror in your mirrorlist file. I have had my entire system several updates behind because the first mirror in the list did not contain the latest packages, so even a pacman -Su (system upgrade) was behind. Therefore, I usually keep the actual ftp://archlinux.org mirror first in my mirrorlist to ensure that pacman -Sy gets the latest packages. Or if you use the http://www.archlinux.org/mirrors/status/ like my script below, you can tell it to only give you mirrors that are 100% up-to-date.