I understand the deal and it makes a lot of sense. It's easy to get caught up in his performance today. He was superb but he was similarly excellent in the same fixture last season. City aren't knee jerkers like us. They will have assessed him all last season and decided he isn't quite ready to be a reliable defender every week with us. Champions League will be a big focus this season for the heirarchy imo and it seems they would feel we have a better chance with an older, more experienced defender. Pellegrini showed he didn't trust Mangala fully by choosing a 33 year old to start against Barca + Messi over him.
The fact it appears to be a simple one year loan is perfect for us. We send him to a top 4 club in Spain, and he will gain experience in multiple games against the likes of Real, Barca and Atletico and he will hopefully come back a more complete package.
In the mean time we will have a guy who got into the La Liga team of the year and Copa America team of the tournament and can perhaps focus more on developing Denayer rather than Denayer and Mangala at the same time.