
The Blues were effectively out of the game after just 16 minutes thanks to goals from 16-year-old Max Dowman and England international Noni Madueke.
Although they rallied towards the latter stages of the first half, Dowman added a third shortly after the restart, with stand-in skipper Mikel Merino getting in on the act before the hour-mark.
Anis Mehmeti and Chuba Akpom both found the back of the net to reduce the deficit, but the Gunners felt comfortable throughout the 90 minutes.
“I thought we got heavily punished,” O’Neil said after the match. “It was a game that was made to look really one-sided by the scoreline that probably wasn't really.
“We made a couple of mistakes. The first two shots end up in the goal, and then they produce a couple of moments of quality in the second half to get to four.
“But I thought we looked a threat all night. I thought we should have probably scored more. We arrived in their box a lot.
The Gunners found the back of the net four times before the hour-mark (Image: Ross Halls)
“It was a tough test with a group that hasn't played much, and I thought a lot of them came out, or all of them, came out with real credit.
“I thought they had the right go, stuck at it. It didn't feel like a 4-0 game at any point, but the quality that they have meant that it was.
“We found a way to fight our way back into it. Losing by two goals against them is not a dreadful effort. I’m disappointed that we didn't win because that's what we're here for, but lots of positives.
“We managed to get some minutes into a lot of players that need it, and we still look a threat, which is the important thing for me.
“I think they're a good side defensively. They don't concede many chances at all, and we were still able to get through. We were still able to create problems for them.
“But we gave ourselves an uphill battle, obviously, conceding two as early as we did, similarly to the Liverpool game.”
It didn’t help that Arsenal were still able to field an incredibly strong team, despite making nine changes, including the likes of Gabriel, Myles Lewis-Skelly, Eberechi Eze and Viktor Gyokeres.
Goals from Anis Mehmeti and Chuba Akpom reduced the deficit at Portman Road (Image: Ross Halls)
O’Neil made 10 changes to his side, which included players with little in the way of competitive match rhythm, and perhaps a lack of on-field connections.
“I think that's the most extreme test you can face,” he admitted.
“They've been together five years. They're unbelievably well-versed in what they do. They have solutions for a lot of problems that you try to cause them. They know them all very, very well.
“You can see that they're a well-oiled machine that deals with lots and lots of things very, very well on the fly. It was more the clinical nature, I think, that caught us. It felt like every time we made a slight mistake or someone stepped out of line, it just ended up in the goal.
“It's not like, ‘oh, we've made a mistake and we got away with one’, and you learn from it on the next phase. It seems like, similar to the Liverpool game, two errors, two nil down, and then a mountain to climb.
“I’m disappointed with those. The second goal especially, just a bit of a lack of understanding. The first one's just a mistake, a misplaced pass. The second one is us trying to do the right things, but not quite getting it right.
Town crash out of the Carabao Cup at the third-round stage (Image: Ross Halls)
“But then there was lots of good play to enjoy. I thought it was some really exciting stuff, some really good attacking stuff.
“We've managed to freshen a few up. We've managed to get some minutes into some. We've managed to have a good go against the best team around. Now we need to get ready for a big game at Everton at the weekend.
Now, out of the Carabao Cup, full focus turns to the Premier League as Ipswich aim to avoid an immediate return to the second tier. A strong start to the campaign continues at Everton on Saturday.
“I don’t think that was the aim [to exit the Carabao Cup], of course,” O’Neil explained. “We wanted to stay in, we wanted to get as far as we could.
“When you're drawn against Arsenal, you know that might be tough. We did our best, and we fell a bit short this evening. But there’s no shame in that, to lose by two goals to a team as good as they are. The bench they had, how clinical they were on the night as well.
“There wasn’t much in the game. I'm not big on stats and things, but I checked them quickly before I came up. Hardly any difference in the shots, touches in each other's box.
O'Neil's men turn their focus back to the Premier League at Everton on Saturday (Image: Ross Halls)
“Just a ruthless, clinical nature about Arsenal, that every time they got near the goal, you could feel that they could punish you. And we did get punished.
“We're learning quickly about the level, especially when you play those big sides. We had a little spell at Man United which was the same. We had the start against Liverpool which was the same. Then Arsenal tonight, where you recognise that any slips or anything like that can really cost you.
“We also learnt that we have the quality to hurt teams, creating a lot of chances, scoring a lot of goals.
“There are big positives. Eyes are now firmly on Everton, the last game in a really important block for us.
“Can we take some more points and improve our league position?”