A “street Arab” is an antiquated (and needless to say, racist) term for a homeless child. Watson’s view of the children as unsavory reveals his elitist attitude toward people of lower social classes. By contrast, Holmes recognizes their merit, acknowledging them to be superior to the Scotland Yard policemen. His ability to see past their social class is perhaps a consequence of his defiance of many social mores. Identified as the Baker Street Irregulars in the book
The Sign of the Four, Holmes’ “street Arabs” were likely inspired by Doyle’s childhood leadership of his own street gang.