City slipped to their first home defeat since December 2016 as FC Basel won the second leg of their last-16 tie 2-1 on Wednesday night.
It was not enough to prevent Guardiola's side progressing to the last eight, with Gabriel Jesus' early goal helping them to an overall 5-2 aggregate success - but it was still an unexpected slip.
Jesus put the Premier League leaders ahead inside eight minutes but the Swiss champions responded to take victory on the night with goals from the impressive Mohamed Elyounoussi and Michael Lang.
Guardiola made six changes from the side that beat Chelsea at the weekend with the likes of Sergio Aguero, Kevin De Bruyne and David Silva among those not included - and not surprisingly the intensity dropped.
"The first half was quite good but in the second half we forgot to attack, we forgot to play," he told BT Sport.
"When we pass the ball we do it to move through the opponents to attack - just to pass the ball for itself (like we did) is nothing and the second half was really really poor.
"It is not easy to play with a 4-0 lead. We tried, we spoke about that and I think what we showed in the first half we showed we wanted to win the game.
"We created a lot of chances and we were good.
"But after 1-1 in the second half, it didn’t happen.
"We just passed for itself and when that happens, that is not football."
Additional reporting by the Press Association.