We're convinced, after The Pearl episode, that The Button is simply a psychological experiment... And in the Finale, or sometime next season, we find out the button was more than a psychological experiment.

Then The Button would serve many more levels of meaning than that one-plane. How do the writers know when to plan story arcs?

Story arcs are planned in advanced, generally at the beginning of the season. The big idea of the arc is planned out but the detail is generally worked out as they get closer. That's a good thing because it allows the story to breathe and expand organically as the season progresses. So for the second season finale, it was worked out at the beginning of the season what they wanted it to be.