"You can't sugar coat it, we weren't good enough and they were," a drained-looking Horwill told a news conference after his side were thrashed 41-16 in Sydney to lose the series 2-1.
Asked for his feelings, he said: "Devastated. You don't get another crack for 12 years."
The victory gave the Lions their first tour win in 16 years in a thrilling finale after the first two games were decided by the narrowest of margins.
The Wallabies started badly when scrum-half Will Genia fumbled the ball from the kick-off and from a quickly-taken free kick the Lions charged the home line for Alex Corbisiero to score inside the first 90 seconds.
Wallabies coach Robbie Deans told the news conference: "No-one goes out there to drop the first kick-off but...what it did was it gave the Lions access and they used it effectively.
"Ultimately they used their set piece to great advantage...and once they had that momentum they really fed off it," added Deans, who said the changes Lions coach Warren Gatland made after their narrow second-Test defeat in Melbourne a week ago had rejuvenated the visitors.
"The Lions changes probably meant they could go harder and that was the way it was," said Deans.
Horwill also said his team had sat back after losing some early penalty decisions.
"I don't know if we started flat. We dropped the first kick (and) obviously that's not great and we let them into the game. We should have been better than that," he said.
"I think we got penalised early and we probably became a little bit gun shy. We sat back a bit and allowed them to dictate terms and that hurt us," he added.
"Other than that they scrummaged well and we weren't up to scratch."
Horwill said he felt the Wallabies were starting to get back into the game by the end of the first half, cutting the Lions' lead to within three points soon after the restart.
"We probably started the second half the way we wanted to start the first half by applying pressure and turning that pressure into points. We got within three and then (we made) a couple of silly errors and little misreads," he said.
"The Lions were very good and they deserved to win and after two games that were very close it is disappointing we had a final scoreline that looked like it did," said Horwill.
There has been speculation over the future of Deans but Horwill threw his support behind him.
"Robbie's the coach. He's contracted. He's a great coach and now's not the time to time to talk about it," said Horwill.
"We'll review everything at the end, after this. Five minutes after I've played a Test match is not the time to talk about coaching positions." he added.
Media speculation has mentioned Jake White of the Brumbies or Ewen Mackenzie of Queensland Reds as a possible replacement for Deans, and the Wallabies coach admitted his future was not in his hands.
"You don't presume anything in this industry. Those decisions are made by others," said Deans.
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