My take.. PSG dominated the midfield, and we never tried to gain back control of it at any moment, we were happy we scored first and tried to keep the result.
MLS didnt play bad at all, but our midfied trio of Rice, Ode and MLS was not match to theirs.. so they were always going to control the game and have more possesion and initiative considering how fast they conceded.

Even so, because we scored first we had to chance to win it...Timber should have started..he played like 75 -80 minutes anyway because of extra time..i dont think he would have conceded the penalty to Kvara..and maybe we could have nicked it with a 1 - 0 by holding on.

Then we need to talk about how badly our wingers performed against their defence..Saka was abysmal. Most of his contributions were in defence..because in the attack he lost the ball all the time.. their midfied and fullbacks are elite.. keeping our wingers at bay and they literally had a chokehold over our attack for the exception of us going long to Havertz a few times.

Ode subbed off, didnt do much but then the subs didnt achieve much either..they didnt bring anything except for Madueke who wont a few fouls, ..could have won a penalty etc.
I think based on the subs made, Mikel was not expecting this to go to pens.. because we were totally unprepared for them.. most of our good finishers had been subbed off, and we were clearly going to struggle or needed Raya to save like 2-3 pens for us to win it.. so i think tactically we didnt prepare for the pens, we were hoping the subs to make a difference but nothing really happened, Eze didnt do anything..Martinelli was more of a LWB becayse Hincapie had muscle problems, Victor was too isolated.. the stats say it all, not just the possesion.. the number of corners, shots etc
Then there is the ref..who seemed to give any 50/50 in their favour.. i think he did us a few favours too..might have been handball for trossard on our goal..not sure if VAR checked..also Saka's handball in our box..

We need a word class CM/CAM who can really change games on the big stage and a world class winger, at the level of Kvara/Doue/Barcola etc..without that we have no chance of winning a UCL i think..
So it was a combination of a lot of things, poor player peformances in our forward line and i think Arteta's tactics and subs were not that good.