Translation:The wrist is between the hand and the arm.
Words like "Handgelenk" are why I love German so much. I was hoping that the word for ankle would be Füßgelenk, but it wasn't.
I originally thought zwischen could accommodate the Akkusativ as well, as long as it was answering a "Wo..." question.
"Zwischen" follows the typical rule for those prepositions that take either case: it takes dative when it's referring to a location, it takes dative, and when it's referring to a destination, it takes accusative.
So this sentence tells where the wrist is located, so you use dative. If you were putting something between the hand and the arm (somehow), then that spot would be the destination of your putting, so you would use accusative.
They're both in the dative case, but 'die Hand' is a feminine noun whose dative is 'der Hand'