I see so I would somehow get css to highlight the background? I don't have to specify a particular color as since thunar and nemo both use the same color when it gets highlighted, it appears that it is the arc theme that is setting the color so in my case I would just use css to basically highlight the background color?
The correct way to do it is to use CSS, yes. If using Adwaita you automatically get a lot of standard colors, defined as CSS variables. For plain GTK I suggest to inspect an existing application and choose the color you like better, adjusting it so that it shows correctly in your UI.
For a "selected" entry you will need the :focus-within pseudo-class, because what really gets focused is the GtkText inside the GtkEntry. Something like:
You can have a look at the example entry-background-highlighthere that I just wrote. It shows how to load a custom stylesheet (from a string) that changes the background color when the text inside it is focused.
So I have actually installed arc theme and currently my application does follow the theme, however just the background highlighting thing (like in nemo):
does not occur, I do understand I need to use CSS.
In your example it looks like you are forcing a particular background color to be present, however in my case I want my entry to use the background color preset by the arc theme I am not too sure how to do this?