The Champions League is never the same as the domestic league, so of course the pressure and atmosphere are different.
The teams that compete in the group stage are the best teams representing their respective countries' domestic leagues, so it is only natural that they play with great enthusiasm to beat each other even though their club ratings are not as high as the ratings of top teams like Arsenal.
UCL is the highest level of football competition, it cannot compare with any domestic league. Sure, it is more competitive because only the best teams in each European leagues which can compete in UCL. Every team dreams to win UCL trophy since it will be a proof that they are the best team in the world. However, it is a very difficult matter because it doesn't only need quality team but it is also about the winning mentality. So far, only Real Madrid which can show great mentality in UCL. Th team like Arsenal has a quality squad, but they have no strong mentality. This makes them to be difficult to win the UCL trophy.
Besides, Arsenal so far has been better than Arsenal in the last few seasons, I mean the performance of the players has been very good and Arteta has made his team look stronger. Arsenal just need a stronger mentality to compete in a competition as big as the Champions League, but their success in winning the title really depends on their performance.
Honestly, I don't have an idea to compare current Arsenal squad and the past squads. I think it is not really necessary. However, the current Arsenal squad looks strong enough, they have many quality players. But they seems having no strong strikers, this can be the weakness of Arsenal. They need to have a strong striker who has good experience in UCL. If Arsenal can have it, Arsenal may have a chance to win UCL trophy. But sure, Arteta also needs to improve the mentality of Arsenal players. The quality of squad is nothing if they have no strong mentality.