In the aim to improve last year's showing where they won a bronze medal by finishing third, Notoane's side ran out of steam against the Gunners.
Imposing striker Stephy Mavididi netted twice for Arsenal while Sipho Mbule reduce the deficit but any thought of levelling were dashed as Vladislav Dragomir made it three for the English side.
Notoane, who replaced Thabo Senong to take over the team, had won the last four matches en route to the final but he felt Arsenal were two steps ahead of his side.
“We are disappointed to lose the game the way we lost it,” he told reporters after the match.
“We came into this game and we knew what they are about and I thought we played very well. Sloppy in the beginning of the first half but we created a lot of chances and unfortunately today we needed to score and convert but we didn't take them, and that made a huge different between the two sides.
“Basically the strength of the opposition you could see from game one up to game five [the difference] was there. Today we met probably the stiffest of competition and we played very well in my opinion, created a lot of chances.”
The tournament afforded the opportunity for young striker Khanyisa Mayo to star as he won the tournament's Golden Boot and was also named Player of the Tournament.
The 17-year-old scored six goals in four matches, one ahead of Arsenal's Mavididi, and Notoane felt the youngster was anxious in his decision-making as his focus was more on the individual gong.
“Probably a little bit nerve-wracking for him and he's a young boy, anxious maybe in terms of maintaining the top goalscorer award,” he said.
“Because the chances he had today were actually better than most of the games. I thought you could see mentally as well, I'm saying maybe a little bit of composure at certain times, if he took the touch and finished it would have been better but those are the lessons that he will take out of this tournament.”
The majority of these boys will form part of the Cosafa Under-20 team later this year in December and also the African Youth Championship next year in March in Zambia.