Serge Gnabry scored twice in three minutes early in the second half and Robert Lewandowski bagged Bayern's third goal to complete a masterful display from Hansi Flick's side at Stamford Bridge, AFP reported.
"That's football at this level, the levels of Bayern were fantastic. It was a harsh lesson for the players. It's the reality of the Champions League," Lampard said.
"If you give people of that quality enough chances they will score goals.
"There is a lot to their team, players that have been there a long time. We have to respect that.
"But we weren't confident on the ball, that was my biggest disappointment, from start to finish."
It was a night when all of the problems that have dogged Chelsea at times during Lampard's first season were on display.
Chelsea was toothless up front with Lampard's decision to start Olivier Giroud instead of Tammy Abraham backfiring.
The Blues lacked organization at the back and drive and creativity in midfield, with a lack of leadership also notable as they lost their heads with the tie slipping away.
Lampard could not hide his frustration and made it clear few of his players came out of the match with any credit.
"I learned about the players. We have to show character. They need to use it to positive effect," Lampard said.
"When you have an eye-opener like tonight, the only answer is to say 'I'm not going to look at anyone else in the team but myself. Who was my direct opponent and how did I do?'
"I thought the only player who showed that personality who looked like he could play in any team was (Mateo) Kovacic."
Lampard's side has now lost eight matches at Stamford Bridge in all competitions this season, its most in a single campaign since 1985-86.
It has often been better away from home, but it would take a miracle, at the venue where it beat Bayern in the 2012 Champions League final, to make the quarterfinals now.
"We have to go and play with pride and not consider the scoreline too much. It's pretty clear we are in a very bad position going into the second leg," Lampard said.
"I'm more concerned about the big picture and how quickly we can recover in the Premier League."