The draw leaves the Gunners just two points behind league leaders Liverpool, with defending champions City trailing by a single point.
Neville, a former Manchester United captain, commended Mikel Arteta's side for addressing key questions about their title aspirations with their display at the Etihad Stadium.
Mental Fortitude and Defensive Solidity on Display
Neville lauded Arsenal's mental strength, emphasizing their ability to stand firm in a challenging encounter against City.
He noted the stark contrast from their previous visit, where they faltered, but this time, they appeared equipped for a sustained title challenge.
As the Mirror reported, Neville said, "The other one obviously is the defensive side of things. Last year without Saliba they were harmed and that has been proven today.
To me today Saliba was immense, so was Gabriel, and the work ethic of the two wide players and two forwards was incredible."
He specifically highlighted the defensive partnership of William Saliba and Gabriel Magalhaes, who effectively neutralized the threat posed by City's attacking trio of Erling Haaland, Phil Foden, and Kevin De Bruyne.
"They really ganged up on Haaland - it was a classic 'one go tight, the other drop off', old-fashioned tactic. But, they had a lot of players around them that enabled them to do that."
Tactical Brilliance and Collective Effort
The former United skipper also highlighted Arsenal's tactical discipline, particularly in their defensive setup, where the entire team contributed to nullifying City's attacking threats.
"If you're playing against world-class players it often baffles me, don't be embarrassed and think you need to double up. You have to get someone else with you and that's what Jesus did.
“Jesus got Kiwior out of a lot of trouble today. He was having a difficult game early on, Jesus right next to him and Saka next to Ben White. They had a brilliant game."
Neville emphasized the importance of collective defending, applauding the coordinated efforts of Arsenal's full-backs, midfielders, and forwards in supporting the defensive line.