Even Whitebeard was surprised to hear that Shanks lost his arm in a place like East Blue [East Blue is considered the weakest among the four seas]. Whitebeard mentioned that the duel between Shanks and Mihawk is considered to be a legend by many. This further proves the power level of Shanks. Whitebeard also mentions “22 years”, that means Shanks was already quite powerful during the time when he came to Luffy’s hometown.
Shanks mentioned that he had sacrificed the arm for the next generation indicating that he could have easily avoided the Sea King if he wanted to.
It was done to show Luffy that the sea is a dangerous place to be and he needed to be powerful enough to survive in this sea. Shanks also wanted to make Luffy realize that he may need to sacrifice himself to save the people who are important to him.
