Liverpool is indeed a better team than PSG.
They had a bad night, and they lost in the penalty lottery, anything can happen there.
Salah's hope of winning the Balon D'or went along with that penalty lottery, perhaps that is why the defeat hurt him the most because he was having a really good season, already setting a new record in the premier league and if Liverpool had won the Champions League will improve his chances. They had a bad night, and they lost in the penalty lottery, anything can happen there.
Now the conversation is now about Raphinha and Mbappe I think, all of course based on who helps their club win the Champions League.
Sometimes a club's success in a competition is not only based on who is better and stronger there is another factor called luck well for this one, it can side with anyone. Real example is Aston Villa who managed to reach the Quarter-finals even though in the Premier League they are in 8th position Yeah of course it's hard to explain but luck brought them this far. Do you think Aston Villa will end up in the Quarter finals? normally yes but there is no guarantee who knows, we might see them play all the way to the final
Prediction of the teams that will go to the semi finals: Bayern Munich, Real Madrid, Barcelona and PSG this is what we think but wait, we will see it at the end of April.
Most times team often prefer playing well in the champion league than their domestic league. This is why we can see them performing well in champion league when compare to their domestic league. A typical example is that of Aston Villa who has gone that far in the champion league but presently at 8th position in the premier league. Just like you said, Aston Villa may be lucky to get to quarter final but this will be determined by the opponent given to them to play with.