Of paganism that statement is true (wars, forced conversion, etc., not to mention all its outward symbols). Thereafter Christians and Jews were under many restrictions, and persecution or worse, at the disfavour of rulers, but they still there. Jewish communities remained in the area for centuries and centuries.
Also, what exactly do you mean by "Arabia" panoptic?
As Islam spread, Arabia also spread, today Egypt, Iraq, even North Africa are regarded as Arabian nations.'
That wasn't the case earlier. Islam not only wiped out faiths, it also wiped out languages.
The Coptic language of Egypt being an example.
In Muhammad's time, what was Arabia was a much smaller place.
While Judaism might have remained in what later became Arabia, it was definitely wiped out in the first towns Islam spread-Mecca, Medina etc. So did Christianity.
Judaism & Christianity did remain in many of the lands which later became part of Arabia, but Muhammad ensured that it disappeared from his birthplace.