Many wondered if City's fine start was just a flash in the pan following a disappointing performance at Blackburn last time out.
But Sven believes City showed what they are really made of against Villa.
"It was important for many reasons, 3 points being the main one," he said.
"After Blackburn, we had to wait 2 weeks to ask what was the real Manchester City? Was it the way we started the season, or the one against Blackburn? We had the answer.
"We fought, we played good football and, to be fair, Villa created a couple of good chances as well. In the end I think we deserved to win and I'm very happy with the performance and the spirit in the team.
"You can't expect an easy game against Villa, their backline are all big, tall players and all experienced. If we can win all our games 1-0 I'll be happy. That's the Premier League, you don't normally win with a big score."
Despite losing our 2 previous games, the 3 points was enough for us to go 2nd and break up the 'big four' at the top of the table.
Sven knows we'll be doing well to be there come the end of the season so is not getting carried away by our fantastic early-season form.
"We deserve the points we have, and at Arsenal, with a bit more luck, we'd have had a point more," added Sven. "Yes, we're 2nd, but some teams have played less games so it's very dangerous to talk about 2nd, 3rd or 4th place.
"If you were putting some money on the top four next May, you would put it on the 'big four'. As long as we play good football, perform and show the spirit we have, I'll be very happy."