Leicester - the only Football League side left in the competition at the quarter-final stage - struggled to cope with the pace and ability of their top-flight opponents and found themselves behind after only eight minutes courtesy of Aleksandar Kolarov's free-kick.
Edin Dzeko then struck either side of half-time to give Manuel Pellegrini's men control, although Lloyd Dyer did manage a late consolation before the game finished 3-1 in the visitors' favour.
"When you play against sides as good as Manchester City you've got to give them problems," said Pearson.
"We got punished for small mistakes and I think that gives you a chance to see the difference between the Premier League sides (and those in the Championship).
"The first goal is a great strike from a free-kick, but the second and third goals were disappointing from our perspective.
"I would say though that in the second half our desire to try and get something out of the game was much better, but it was probably a little too late.
"It was tough for us at times tonight; we worked very very hard but we weren't quite able to make things count when we had situations ourselves.
"It's a learning experience for us; we felt we had to keep it tighter for longer, so to come in two goals adrift is going to make it difficult for us."
Leicester return to league action on Saturday and, with the club sitting third in the Championship, Pearson has no doubts over his primary aim.
"Our biggest priority has to be league status," he added. "We certainly need to be involved in the promotion race."
