First he want to use first person game template. And it has only arms. So he needs to extend it with player character.
To make player character behave properly you need to subclass it from PlayerCharacter, else you are into programming all those character movement animations.
And I am unsure how pawn that is inherited from it will behave when you want to see from first person and swap character mesh with just arms.
This is where unreal may do weird things, I also assume that he wants to make this game multiplayer later, playercharacter (and first person pawn) have a lot of replication already codded in. It is potentially can of worms. Also second condition was something easy to do for beginner, i think hidding or destroying character pawn and spawning first person one is easiest to do.