Norwich in defence were, wow, honestly if any game makes you think matches get thrown in england that is it. Despite getting caught on the break constantly they stayed exceptionally, stupidly high up the pitch, pushed both fullbacks way up and both CBs were way up the pitch. Then on the break they consistently ignored the other guys running, focused 100% on the ball and rather than move closer to the guys who would receive the passes they left them in so much space it was nuts.
Newcastle still did well, lots of strikers would have missed a few of those chances but then they got a lucky deflection as well. Defensively they weren't good.
I forget where I saw it but the average position of the Norwich team was insane. You generally see the average position the CBs had when looking at Barcelona in a game they've had 70% of which half of that is camped out just infront of the opposition penalty box. A team that has conceded 3 you would never see set up like that.
I think more than anything Norwich set up as if they could be Newcastle 10-0 if they just went ultra offensive and they failed to adapt to another formation when Newcastle got through so easily. A single defensive minded player in midfield and they subbed him for another very attacking player.
It was one of the single most inept managerial performances in the history of the league. They setup to not defend at all and got thrashed because of it. Seriously one of the strangest performances I've seen in the league.
EDIT:-
http://www.espnfc.co.uk/gamecast/422581/gamecast.html
If you look under tactical formation there is an average position option for both sides. Norwich's CBs were just outside the centre circle and both fullbacks average position was well into the opposition half.
http://www.espnfc.co.uk/gamecast/422575/gamecast.html
With Arsenal, lets say a ridiculously better team who could reasonably expect to batter Watford our CBs were 10+ yards deeper, one of the fullbacks in our own half and Bellerin not as far forward as Norwich's RB.
It's fine pushing people forward and Norwich looked good enough in the second half till conceding again, but they left two of not the fastest CBs way too far forward, the fullbacks too far forward to use their pace to cover the counter attacks. They were begging to be hit in behind and lost because of that one issue. CBs encroaching on the central midfield's area of the pitch leaving far far too much space in behind them. Tactically it was embarrassingly poor.