Yup, Liverpool looked horrible in the 1st leg, but they were lucky to grab a win. I don't know what happened there, but their poor performance should've rung alarm bells for Arne Slot. They did improve in the rematch but it still wasn't good enough.
It's a shame because they did really well in the league stage of the UCL (and are on the way of winning the Premier League). Many people, myself included, considered them to be the strongest team and a favourite to win the UCL.
The problem is that the EPL is overrated. I don't see any EPL clubs showing results that would confirm that it is the number 1 league in European (and world) football. Sometimes one club rises to the top level and can even win the title, but the same happens with clubs from other countries. PSG is undoubtedly a top club, so underestimating it was a clear mistake on the part of both bookmakers and fans (and maybe on the part of Liverpool players, although they are professionals and perhaps they understood everything correctly).