This has happened to me all the time and it is indeed quite dangerous. I am really long, lanky and have lowish blood pressure. Wake up and the whole arm is completely dead numb. I can flop it around which I do furiously until the sensation returns (gets the blood flowing back into it) and it is tingly to the point of painful as that happens.
It used to happen a lot more when I was drinking heavily (so I would not wake up as easily as I do now). I never thought much of it back then but a guy my buddy knew had his entire arm suffer extreme nerve damage to the point it was essentially paralyzed. The guy supposedly wasn't a drunk or an addict or anything. Just slept weird and woke up with a dead arm. Terrifying prospect for a guitar player.
That is kind of what happened to Dave Mustaine. I don't know the full story but supposedly he was sitting in a chair in some weird way that it cut off the circulation to his arm (not sure if he nodded off or what but IDK how you wouldn't notice something like that). It cause severe nerve damage and he had to have surgeries and tons of rehab to be able to play again. Not sure if this was during one of his relapses or if he was sober... but I'm inclined to think if the claim is he was sober he is lying (junkies tend to do that).
Anyhoo... when I sleep I have pillows that I bear hug throughout the night (which helps keep my spine aligned) that seems to minimize the eventuality if waking up with dead arm. Probably because instead of my skeleton crushing the arteries it's a pillow so at least some blood can get through. Have to keep a pillow between my legs too otherwise a ton of other nastiness happens.
Wrapping my arms around another human while I sleep? Fuggedaboutit.