United lost 3-0 on Tuesday at Camp Nou, completing a 4-0 aggregate defeat in the Champions League quarter-final.
Ole Gunnar Solskjaer's men made some unwanted history in the defeat, with Man Utd suffering their worst ever European knockout-round defeat over two legs.
Neville highlighted two United players he feels can learn from the Barca defeat, while indicating that others are simply not good enough to improve sufficiently.
"For Marcus Rashford, he recognises what the elite level is in terms of club football," Neville told beIN SPORTS. "[For] Scott McTominay, it's a big lesson for him over the two games, he's done well in the games but some of the others, they're not good enough.
"The coaching staff will see there's a massive gulf between Europe's best teams and where Manchester United are at. Manchester United need to revamp their squad - there is no doubt about that. "
"[Solskjaer] needs a new defence in its entirety I would say."
Tuesday's defeat was the fifth in seven matches for Man Utd after a hot start under Solskjaer, and Neville believes the club's performances in recent weeks are a more realistic indicator of their current level.
"The last few weeks have been a reality check for Manchester United, but tonight makes you feel about how far away they are from being the team they need to be," Neville said.
"I think Ole knew that for the last couple months. The first couple months in the job, everything was rosy, everything was perfect, the players were playing at a level that, to be fair, I'd not seen, they'd not shown.
"Now we're seeing a bit more of what they're like."
Neville also hit out at midfielder Paul Pogba, who struggled under former manager Jose Mourinho before undergoing a transformation with the arrival of Solskjaer.
"Pogba is now playing how he was pre-Ole's arrival," Neville said.
"I thought tonight he was really poor, rolling his foot over the ball all the time, playing for himself, not popping up and moving, [he] didn't look interested at times.
"But he's a great player and he can be a great player, he just has to get his focus back."