Not sure what a "LAN" is but it happened to me at work that I thought .0 is not a valid host address until I learned about Layer-3 only networks. So also no ARP. I guess this is still a LAN although it's probably an "Enterprise LAN".
huh? 1.2.3.0/23 is a valid host address, it doesn't have to be Layer-3 only or whatever. it's just basic subnetting.