In order to play Junk Arm you must fulfill the following criteria:
~Have 1 Item card in your discard pile already, except for "Junk Arm"
~Have at least 3 cards in your hand, including the Junk Arm you want to play
Then this is what you do.
~Play Junk Arm from your hand.
~Discard 2 other cards from your hand.
~Add one Item card, except a "Junk Arm", from your discard pile to your hand.
~Put the Junk Arm you just played into your discard pile.
The phrase "Discard 2 cards from your hand" is cost for activation. If you cannot fulfill that, or have a valid Item card in your discard pile to target, you cannot play Junk Arm.