DIAGNOSIS The mechanical IR cut filter switching. This is the physical piece that moves in front of the sensor to switch between day (color) and night (infrared) vision modes.
FIX The click is normal operation but should be quiet. If it's loud, the mechanism may be sticking due to temperature or minor debris. Set the Night Vision mode to 'On' permanently in the camera's video settings. This locks the filter in the night vision position and stops the switching noise.
IF THAT DIDN'T WORK If the click is constant and the video is black or strangely colored, the filter is stuck. This requires a hardware repair. Contact Arlo Support for a warranty assessment.
HEADS UP Do not shake or tap the camera to try to free a stuck filter. You can damage the image sensor. The click is most noticeable in very quiet environments and during dusk/dawn when the camera frequently switches modes.