These are heady days for Aston Villa. Everybody suspected they were underperforming under former coach Steven Gerrard, but nobody perhaps quite expected the lift-off that has happened under Unai Emery. It’s not just that they sit third in the table, two points off the top, it’s the fact that in their past two games they have beaten last season’s top two.

The assumption is that, at some point, they will stumble, and talk of them being in a title race is always delivered in tones that acknowledge that, but whether that happens or not, the performance in beating Manchester City last Wednesday was one of the most striking the Premier League has ever known. It may only have finished 1-0, but Villa battered City – xG models had the hosts up 2.33 to City’s 0.86. This wasn’t about being clever and picking off their opponents on the break, or surviving a sustained spell of pressure: for all but about 15 minutes just after half-time (in which period City didn’t have a shot), Villa overwhelmed them. Nobody has ever dominated City to that extent in a Premier League match.

As such, there was a sense of paradigms shifting. It’s always been said that teams have to be almost perfect to beat City, and to hope that Pep Guardiola’s side have an off-day but Villa won despite being quite wasteful in front of goal and despite Ederson having a fine game. There is the obvious caveat that this was a City missing a number of key players, that they started the game with John Stones and Manuel Akanji as the two deep-lying midfielders, but it was an extraordinary performance nevertheless. Nobody should be overcome with sympathy if a state-run club hasn’t bought itself a big enough squad, particularly given Kalvin Phillips, Matheus Nunes and Mateo Kovacic, $125m-worth of central midfielders, sat on the bench.

There comes a point in the life-cycle of every great team when opponents stop fearing them. City had drawn three in a row before the defeat to Villa and it feels like this run may have diminished some of that aura from Guardiola’s side. That doesn’t mean that they won’t go on to win a sixth league title in seven years or that they’re in some sort of terminal decline. But it does mean that, at least for a while, there may be fewer games in which opponents, even if only subconsciously, almost accept a two- or three-goal defeat before kick-off.

City have a relatively gentle run of fixtures coming up – Newcastle are the only side currently in the top half they will face before the Manchester derby at the beginning of March – but those games may be a little more competitive than they would otherwise have been. That’s especially true if Erling Haaland is out for a protracted period with an injury, although Guardiola said a “bone stress reaction” in the Norwegian’s foot did not mean a fracture. City were far from their best in beating Luton 2-1 on Sunday, but perhaps the most significant thing was the resilience they showed having fallen behind.

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Although Villa beat Arsenal by the same 1-0 scoreline, the game was very different. Having taken an early lead, Villa were under pressure for long periods, but Arsenal found former goalkeeper Emi Martínez in fine form, might have had a penalty when Douglas Luiz kicked the underside of Gabriel Jesus’s boot as the two went for the same bouncing ball, and had an equaliser ruled out (correctly under the law as it currently stands) after the ball had brushed Kai Havertz’s hand. But, not for the first time away from home, they looked a little toothless, lacking in ruthlessness.

Arsenal lost the leadership of the Premier League but there was perhaps some consolation in the fact that although their trips to Villa and Luton this week ended up in the same outcome as City’s – a one-goal defeat and a one-goal win – they looked more fluent than the champions in both games.

As for Villa, amid the euphoria, there may be some concerns about just how fatigued they appeared towards the end of the Arsenal game, while if they are to sustain a title challenge, their away form needs to improve. They’ve dropped 13 points away this season, although that is a feature of top sides: Arsenal have dropped eight on the road, and Liverpool, who were far from impressive in winning at Crystal Palace on Saturday, like City, have dropped 11.

All of which is great news for the competitiveness of the Premier League. Fallibility, the sense that nothing is guaranteed, that every point must be fought for, is what sustains a league. City are three points worse off than after 16 games last season, but they are three points nearer the leaders. Last season at this stage the top five were separated by 13 points; this season it’s seven. A blanket finish is unlikely, but even to have three sides still battling for the title at the beginning of May would be a rare treat.

Could Villa be one of them? The suspicion is that their relatively slim squad will count against them, or that somebody will work out their offside trap, but that performance against City means that nobody can dismiss them.

This is an extract from Soccer with Jonathan Wilson, a weekly look from the Guardian US at the game in Europe and beyond. Subscribe for free here. Have a question for Jonathan? Email soccerwithjw@theguardian.com, and he’ll answer the best in a future edition