I actually think they managed the game well before conceding that total fluke of a goal. It was a clear goalkeeper error, there weren't even that many players in front of him.
That's was definitely no 'fluke' from Kevin De Bruyne, true he needed a little bit of luck for the ball to go in, but you can as well take nothing away from the quality of the delivery into the box, if it wasn't a quality delivery, then it wouldn't have even troubled Navas, and looking at that goal for a second time, I see no reason to blame Keylor Navas cause John Stones was about to attack that ball, though the ball curled out of his reach, but just that action by John as he tried to attack the ball confused the goalkeeper as he felt the direction of th ball was about to change, it happens quite a lot of times in football.
PSG can still win but they have to score two goals minimum. Not impossible:)
Of course, the tie isn't decided just yet, but City would love the position they are in at the moment, PSG will have to stop City from scoring at the Etihad if they are to have a chance of going through, but it's pretty difficult to stop City from scoring, they have so much quality in their side, and they are always in pole position to outscore any team they face.