What happens if device sends data to arduino over serial port (UART) and arduino is unable to read it

Depending on the memory available, between 16 and 256 bytes will be stored in a ring buffer. Any bytes that arrive after that will be just thrown away.

The reception code in the core is:

void HardwareSerial::_rx_complete_irq(void) { if (bit_is_clear(*_ucsra, UPE0)) { // No Parity error, read byte and store it in the buffer if there is // room unsigned char c = *_udr; rx_buffer_index_t i = (unsigned int)(_rx_buffer_head + 1) % SERIAL_RX_BUFFER_SIZE; // if we should be storing the received character into the location // just before the tail (meaning that the head would advance to the // current location of the tail), we're about to overflow the buffer // and so we don't write the character or advance the head. if (i != _rx_buffer_tail) { _rx_buffer[_rx_buffer_head] = c; _rx_buffer_head = i; } } else { // Parity error, read byte but discard it *_udr; }; }