Let $\theta = \arctan(x)$. Therefore, $\theta = \arctan(x) \Leftrightarrow x = \tan(\theta)$. We can also write this as $$\frac{x}{1} = \tan(\theta)$$ If we represent this on a triangle and use Pythagoras it is easy to see that $x^2 + 1^2 = c^2 \implies c = \sqrt{x^2 + 1}$, where $c$ is the hypotenuse. Therefore, since sin is opposite over hypotenuse, we have: $$\sin(\theta) = \sin(\arctan(x)) = \frac{x}{\sqrt{x^2 + 1}}$$ As required.
The simplification $\sin(\arctan(x)) = \frac{x}{\sqrt{x^2 + 1}}$ is derived from considering a right triangle or the unit circle, and it holds for all real $x$. This expression will yield a positive value when $x > 0$, and a negative value when $x < 0$, indicating that negative values of $x$ are indeed taken into account in the simplification.