I also see Arsenal as a team that can still be quite strong next season so that some of their closest rivals last season also still have to be wary of Arsenal as their competitor in the race for the Premier League trophy. Likewise in the Champions League because Arsenal could perform better next season and be able to reach a quite crucial stage so that their rivals will still see Arsenal as an opponent that needs to be eliminated early before heading to the quite crucial stages in the Champions League.
These expectations are very similar to what we expected last season but in the end Arsenal were nothing more than a mediocre team in the Champions League competition. They didn't have the conditions to get close to the semifinals and instead they had to fall after successfully qualifying from the group stages.
I never knew there were people who expected much from Arsenal in the UCL. Most of the people I know including myself only had expectations in them winning the EPL from the time they started the return legs and they were in pretty good standing. Unfortunately, Arsenal still lack the ability to finish strong hence, they lost the trophy to Man City. If Arsenal want to be taken seriously, they should start from the EPL first and win it, else they should never dream of winning the UCL because that game is not for kids but for adults.
I don't think any team is afraid or worried about Arsenal's presence and in fact other strong teams are wary of teams full of history who have always been regular champions of the league. Maybe Arsenal is very scary for any team in the same group but after that they are nothing more than a team that can be knocked out easily.
The threat of Arsenal ends at group stages because that is the only time they show some courage. Beyond the group stages, any serious team can easily humble them as we have seen in several appearances they made and came back home in shame.