Nowadays, multi-element cathodes are frequently employed to grow multi-element thin films and coatings using cathodic arc deposition processes. During cathode erosion, the cathode spot sequentially ignites on the cathode surface and imposes melting-solidification cycles that lead to material intermixing and the formation of a modified layer on the cathode surface. To allow us to study these surface modifications, a 10 μm thick Mo/Al multilayer coating was sputter-deposited onto a standard Ti arc cathode. This cathode was eroded by a dc steered arc discharge for a short duration enabling the observation of single craters formed by type 1 and 2 cathode spots. Furthermore, separated clusters of overlapping craters and a fully eroded surface caused by different stages of erosion were differentiated when scanning the erosion track in the lateral direction. Cross sections of single craters were prepared by focused ion beam techniques while metallographic methods were applied to obtain cross sections of overlapping craters and the modified layer. The layers of the multilayer coating acted as trace markers providing new insights into the material intermixing within craters, the material displacements during crater formation, the plasma pressure acting on the craters, and the temperature gradient (heat-affected zone) below the craters. The observations are discussed within the framework of established arc crater formation models.