This is a step forward through the very difficult question of discrimination vs conscience. On the one hand we don't want to see people picked on or marginalized because they are different, but on the other hand we don't want to see people forced to do something they believe is wrong because they've got a gun pointed at their head.
It becomes difficult because some people discriminate against others because they BELIEVE (as an article of faith) that those others are wrong - either existentially, or because of their actions. So in such cases, where does "the law" draw the line?
De Toqueville warned that freedom in America would come into conflict with equality, and we can increasingly see that he was correct. We've seen the two wedding cake cases (one in the USA and one in the UK) on this issue, and the respective supreme courts began to nibble away at this question - but they prefer to address de Toqueville's quandary a little at a time (and who can blame them?). The USA sent its case back to Colorado to be retried (which Colorado has apparently chosen to NOT do) and the UK said that its baker must indeed bake wedding cakes for LGBT customers, but the state can't compel them to make statements (such as written decorations on those cakes) supporting gay marriage.
The Arizona case wades further into this gray area, by trying to define the difference between the state requiring "pure speech" from the artisan, versus the state requiring "only conduct". That's critical, because "pure speech" is constitutionally protected (we can publicly SAY whatever we want), but "conduct" is not protected - (we are not guaranteed any "right" to ACT however we want). The state CAN require (or forbid) conduct, but it can't control free speech. So, if my faith says same-sex marriage is a sin, would my refusal to create a product in support of that sin be protected "pure speech" - or would it be illegal "conduct"?
Even if you feel that civil marriage is everybody's right, do you necessarily also believe that people who disagree with you should be forced at gunpoint to say that your view is correct? To just mouth those words they don't believe, in order to stay out of jail? Should a Muslim sailor be required to assemble with the Christians of the crew on deck for Christian services on Sunday, and required to stand and doff his/her cap during prayer to a deified Jesus? The UK said "no"...that while requiring the Muslim to muster on deck was simply "conduct" and not protected, the doffing of the cap was an individualized sign of submission and, so, was "speech" - and thus protected. The state could not require it. The USA probably would also say "no" if presented with the same case.
But now the question is down to the detailed level of "If I put my all into making my product, is that NOT me expressing my essential self, including all that is me...including my beliefs? Isn't that 'speech'?". THAT is what Arizona is addressing. They decided that a print shop that specialized in custom-designed artistic wedding invitations could indeed refuse to design announcements and invitations for same-sex weddings, in keeping with their constitutionally-guaranteed free speech. They felt the artistry that was displayed in the shop's samples was not simply commercial printing, but was a unique expression of the shop owner's self, and thus was "pure speech" and consequently protected.
Personally, I haven't seen the product, but I am sure that somewhere on the spectrum of creativity and art there is a threshold, above which the result is no longer just "conduct", and actually becomes "speech". I'm content to leave it to local courts to define where that threshold lies...but there's always the USA Supreme Court, if needed. This isn't a simple or clear matter. It may take several decades to sort it out.