Matheus Cunha had Wolves ahead before Villa stormed back through goals from Ollie Watkins, Ezra Konsa and Jhon Duran.
O'Neil later said: "The first half we played very well. No team comes here and wins at a canter. It was not like they were banging the door down. But when we need to fight we need to do it better. The lads are finding out the hard way you cannot play well for a bit.
"It’s disappointing we have come up short. That (second) goal has to be stopped as does the first goal. We need to make sure the fixtures, we have some really tough ones coming up, we need to find a way to fight and scrap.
"We’re not going to dominate games against Aston Villa and Liverpool. We need to behave and act like a team scrapping for everything. We have to make sure we are better when it gets tough."
On the injury to Yerson Mosquera, who was carried off on a stretcher, O'Neil added: "It doesn’t look good at this moment. It’s a big blow for us."