To me, it seems like a hemangioma. It looks very similar to my daughter's. Here's some pictures for you to see:
Hers was not present or very, very light at birth. She was in the NICU and I didn't even know about it until about a week later when the nurse showed me. I knew what it was immediately because my older daughter had one on her lip and we had been through all this before. It looks like your daughters extends further up her arm than mine. At the time, our specialist did not recommend any treatment. He said that hemangiomas in that location tended to do very well. (I trusted him because he had treated my older daughter's lip hemangioma, 8 years ago, pretty aggressively with oral steroids from 10 weeks of age to 10 months...so I felt like he had a good sense of when to treat and when not to.) My daugther's hand/wrist hemangioma went away totally on its own!!!!! I would never have believed it, but it happened. She is 4 now (on 1/28) and it is just a faint shadow. I can see it only because I knew it was there.
So every hemangioma is different so you never really know what to expect, but I just wanted you to see that it is possible to have really good results with minor intervention. We didn't get the chance to used Timolol, so I'm not sure what you can expect with that. But hopefully she will do very well. Keep in touch! I will try to post a picture of what my daughter's looks like now. Take care!