I'm a few season's in to playing HBD, but I still haven't quite wrapped my head around arbitration. On the main arbitration report screen there is a dollar value to the left of the "negotiate long term" link. When looking to negotiate long term, the value of demands are much higher than that original number.

Can I just negotiate a 1 year deal at the number on the first page or how does that number on the main arbitration page work?

That number on the first page is a one year deal.  You can offer what he is asking for in arbitration, or offer something less if you prefer.  You can see what other players of his status make on average to get an idea of what you may want to offer.  Or, if you want to lock him up long term, you can negotiate that on the next page.