Arsene Wenger's side were given the daunting task of facing the reigning champions in the round of 16 in Monday's draw.
The tie is a repeat of last season's showdown at the same stage of the competition, when Bayern progressed on away goals after the two sides were level at 3-3 on aggregate.
Arsenal finished level on points with group winners Borussia Dortmund after losing at Napoli last week and finished second due to their inferior head-to-head record against Jurgen Klopp's side.
That meant Arsenal were not among the top seeds for the round of 16 draw and although Miles was left to rue the London club's failure to top the group, he believes they can give Bayern a run for their money having won 2-0 at the Allianz Arena in March.
"It's obviously going to be a very tough tie," he told Sky Sports. "We had Bayern last season, Barcelona for two years running so we've had the rough end of the draw (in recent years).
"I think we have paid the price (for finishing second), it's a fact. We would much rather be in the other half of the draw but we are where we are and I'm looking forward to these two matches.
"We're optimistic, we ran them very close last year. Don't forget we only lost on away goals. We're hopeful we can come through this one.
"We're top of the Premier League, they are top of the Bundesliga. For me this is the standout tie of the round. It should be two great games of football."
