City have never reached the Champions League final and are yet to even reach the semi-finals in four attempts under Pep Guardiola.
“(City) are a machine ready to win the Champions League,” said Villas-Boas. “They may not be at their best level, their coach admitted that.
“That’s why I allow myself to say that, but they are still at a higher level than us and remain the favourites tomorrow (Tuesday).”
City, who relinquished their Premier League title last season to Liverpool, have only won twice in five league games this season.
Marseille, the only French club to win the European Cup, are playing their first Champions League campaign since 2013-14, when they were knocked out in the group stage.
They lost their Group C opener to Olympiakos last week but have made a solid start in Ligue 1 and are only three points behind the pace-setting Paris Saint-Germain and Lille.
Dimitri Payet has only scored once this season, and Villas-Boas admitted he needs his star winger to find form.
“Dimitri (Payet) is a key player. We have spoken and we both know he can do better,” said the former Chelsea and Tottenham coach.
“But it does not only depend on him, also on the team, which must help raise his level. He needs to rediscover what he brought to the team last season.”
City came from behind to beat Porto 3-1 last week in Manchester, but Guardiola will likely make at least one change to that team, with Kevin De Bruyne fit again and Sergio Aguero struggling with a muscle problem.
Villas-Boas admitted he cannot know what to expect from Guardiola, who has been criticised for tinkering tactically in Europe.
“Pep is able to create surprises, and the problem with City is that they have several dynamics and they can adapt. For us, however, this is not a game for experimenting.”
