I'm not sure the level was that high in the CL knockout stage this season.
Our FA Cup final performance was a better performance than what most teams produced in the CL knockout stage this season, so the answer to your question is not very far at all.
Our 20/21 and 22/23 teams were also easily good enough for a deeper CL run if the draw was somewhat favorable as well. We messed it up for ourselves under Ole, but we were top of our group after 4 games, with a convincing win against PSG in Paris, and a 5-0 win vs Leipzig at home. Last season under ten Hag, we were the better team over two legs and deservedly knocked out La Liga champions Barcelona in the Europa League, who finished 10 points ahead this Real Madrid side (bar Bellingham) over 38 games. We also beat City, Arsenal, Liverpool and Spurs at home in the league, and as ETH said before the 2023 FA Cup final, we were probably the team most likely to stop City in their treble-winning season and we performed better against them than even Arsenal, Bayern or Madrid that season.
So yeah, we're a few years away from being title contenders in the Premier League, but with this pragmatic approach that Ole and ten Hag have both used up until this season (except these last few games since the Arsenal game), we're already a pretty decent cup team, and I don't believe the likes of Atletico, Dortmund, PSG and Barcelona were anything special in the CL this season, if you compare them to our 22/23 team, for example.