classified is a weird term. Perhaps you could give us a post describing the process, what it actually delineates.I'll comment, based on what I've seen, but my knowledge is not exhaustive. My sense is that every government agency does things its own way and has its own rules. There is some commonality among the Departments of Defense, Energy, and State, although far from complete synchronization.
How arbitrary is it? How do we know?
Rules for classification exist and are called "classification guidance." The rules can change frequently, and amendments to the guidance are sent out from the classification arms of the various departments to the organizations handling and generating classified matter.
Those organizations usually have people who keep track of the guidance and advise others in the organization. Certain people are designated to be able to classify material at various levels. These two sets of people do not necessarily overlap.
People working on sensitive projects must have what they write reviewed for classification, which comes in different shapes and levels. Troop movements, for example, are classified in a different way than nuclear weapons design information.
How arbitrary is it? Hard to say. Some things are fairly clearcut, others not so much. And I have no doubt that, particularly at higher bureaucratic levels, which have less accountability, stuff gets classified because someone would be embarrassed if it got out. I've never seen that, but I have seen how people think. The guidance can also be hard to work through. During the 1990s, a lot of nuclear weapons information was declassified. Now it looks like it's being reclassified. So some of the guidance may be self-contradictory or just hard to interpret and apply.
How do we know? Supposedly there are various checks and balances within the classification system, requests for additional review, that sort of thing. But, of course, all that is part of the classified system and not available to those outside it, or even to those inside it without the "need to know." As long as we have secrets and classification, it will be hard to make the system accountable, and it will tend to grow. Daniel Patrick Moynihan's book, Secrecy, is a good discussion of why secrecy in government should be kept to a minimum.
classified is a weird term. I've always thought so. I suspect it's a euphemism that refers to the various levels of secrecy. So a classifier classifies documents into those levels.