Not an expert here, but I think you’re looking at this particular example backwards. Evolution isn’t a “smart” process that picks and chooses favorable traits, it’s more simply “this animal with these traits was able to survive and mate, so these traits get passed on”

So start with what was before the dinosaurs, to my recollection that would be some kind of amphibian, living in both water and land. Probably has four equal-length limbs and walks on all fours.

Whatever exactly happened between A and B idk, but eventually you get to the dinosaurs that walked on two legs. And that there is the answer. They used their legs more, their arms became less important to their survival techniques, and so over time they shrunk.

Survival for those guys was “run fast + big jaws and sharp teeth”. Long tails for balance while running, not much use for the arms. They didn’t shrink because it was an evolutionary advantage, they shrunk because they weren’t doing the heavy lifting. Terrible pun intended.