That's happened to me on two wagons. Both times the linkage from the cylinder to the sliding pin had fallen off. Both times I had to remove the panel from inside, reach in and push the pin back in (I think I used a long, skinny, magnetic screwdriver).

On one wagon, merely tightening the little clip gizmo fixed it. On the other wagon, it happened three times, and I fixed it by securing the little clip thingy with a small plastic zip tie.

I think it happens 'cause I slammed the tailgate too hard, knocking out the linkage.

"...the little two-position arm.."

This is the kid-proof latch. It disables the internal door latch so kids can't open the door from inside. I believe the rear doors have a similar lock.