To understand the battle between Naruto and Luffy, one must understand Naruto's strength.
The gap in strength between them is so big that it is almost impossible for Luffy to win under normal circumstances.
Even though Luffy's Haki was the strongest in his verse, his physical strength was lacking.
On the other hand, Naruto received the biggest boost of his life.
His strongest form was Baryon Mode. In this mode, his Chakra and Kurama's Chakra would collide to produce even stronger Chakra.
Doing this would consume both of their Chakras, and depending on which Chakra was used more, the user would die first.
While this was his strongest form, it wasn't his biggest boost.
Naruto's biggest boost came during his fight with the Fourth Great Ninja War, where he received Chakra from the Sage of Six Paths.
For most people, he received Six Paths Senjutsu, Six Paths Chakra, Six Paths Yang Chakra, and the Sun Seal.
But in reality, he only received Otsutsuki Chakra and the Sun Seal.
That's right! Naruto didn't receive Senjutsu Chakra but rather Otsutsuki Chakra that he combined with Sage Mode to form Six Paths Senjutsu.
After all, Six Paths was a level, not just a title.
It was a stage which could only be defined by Otsutsuki or those who received benefits from an Otsutsuki.
Even Madara and Obito inherited Otsutsuki Chakra on top of Ten-Tails Chakra. After all, Kaguya had merged with the Ten-Tails.
And Hagoromo also did the same thing. Their Chakra had merged a long time ago.
Naruto and Sasuke received Otsutsuki Chakra. Naruto merged it with Natural Energy to produce Senjutsu Chakra.
At the same time, he also received the fundamental understanding of Yin-Yang Release and the five elements.
Sasuke, on the other hand, merged it with his Sharingan to produce the Rinnegan.
Both of them received the same Chakra but used it differently. But the moment they received this Chakra, their limits fundamentally changed.
Naruto held that boost until his battle with Sasuke. On the other hand, Sasuke didn't actually need to hold on to that boost.
The boost didn't increase his strength that much. His biggest improvement came from the fact that he awakened Rinnegan.
That's also why he needed to absorb the Chakra of the Nine Tailed Beasts to surpass Naruto in strength.
Because Naruto also had the Chakra of the Nine Tailed Beasts. This wasn't the benefit Naruto received from Hagoromo.
Naruto's base strength went from a Jonin to somewhere around Elite Jonin during his fight with Sasuke.
On the other hand, Sasuke's strength was already above Kage Level without even using Susanno.
So, Naruto could only bridge that gap using Chakra Mode.
But during that time, his Otsutsuki Chakra was gone. Without this Chakra, he couldn't gather Six Paths Senjutsu Chakra.
Without Six Paths Senjutsu Chakra, he could only rely on the Nine-Tails to absorb the Natural Energy from the surroundings, absorbing it in massive amounts.
He didn't lose his Six Paths Yang Power, but he couldn't use it. Simply put, he didn't have Otsutsuki Chakra to use this power.
Remember, Naruto never understood medical Ninjutsu. Even when he gave Kakashi a new eye, he could only explain what he did.
He could probably teach it to others, but they wouldn't be able to do that because they didn't have Otsutsuki Chakra.
Naruto couldn't use flight because he lost Otsutsuki Chakra. Flight is Otsutsuki's most basic ability.
Naruto didn't become Otsutsuki like his son. He only inherited the Otsutsuki Chakra for a short period.
So, after losing that Chakra, he also lost flight.
He also lost the ability to use Boil Release to enhance his strength.
Because his Chakra was already massively powerful, but his body was still just a human.
Han's Chakra wasn't even close to Naruto's, but even then, he needed the steam armor to control the steam.
Hashirama could probably do this. He was the only person in Naruto's world who took an Otsutsuki's Chakra and made it his own.
That's why his cells were so powerful.
Hashirama literally made Ashura's Chakra his own.
Naruto never did that. He used Hagoromo's Chakra to activate Ashura's Chakra in his body.
That's why Naruto was so much stronger than Sasuke even though both of them received similar boosts from Hagoromo.
Naruto's Chakra fists were going toe-to-toe against Kaguya while Sasuke was having his Susanno destroyed.
This gap didn't come because Hagoromo was partial. It was simply because Sasuke used Indra's Chakra to evolve the Rinnegan.
He used Hagoromo's Chakra to instantly activate Rinnegan.
It took Madara decades before he could awaken the Rinnegan, but Sasuke was able to do it in an instant.
Otherwise, without Hagoromo's Chakra, he would've been waiting for decades to awaken his Rinnegan.
That's also his problem.
He used Hagoromo's Chakra. That was a temporary Chakra, and he used it to awaken his Rinnegan.
That was bound to be a problem for him. Although he got six tomoe in his Rinnegan eye, it also became a problem since he couldn't turn it off.
Without turning it off, it would constantly absorb his Chakra.
Because he used Hagoromo's Chakra to awaken it, not Ashura's Chakra.
On the other hand, Naruto used temporary Chakra to boost his strength temporarily.
After the war, he focused on improving his base strength. He took that from a Jonin to a Super Kage like EMS Madara.
Unlike Sasuke, his bond with the Tailed Beasts wasn't temporary. So, even after losing Otsutsuki Chakra, he could still borrow their Chakra to form pseudo Six Paths Mode.
In this mode, he wasn't using Six Paths Senjutsu but simply combining the Chakra of the Nine Tailed Beasts and Natural Energy to produce a slightly more powerful Senjutsu Chakra.
It wasn't at the level of Six Paths Senjutsu, but it was close.
And this Chakra alone gave him the strength to match fused-Momoshiki, a literal Otsutsuki.
If Naruto had permanently inherited Otsutsuki Chakra, he would've been able to easily fight Jigen or even Isshiki.
But his son did. He became a full-blooded Otsutsuki, allowing him to use Otsutsuki Chakra all the time.
That's also why he got so much stronger in Two Blue Vortex.
Boruto was already a genius, but with Otsutsuki Chakra, he easily managed to reach Six-Tails Level.
Because all he needed was to understand the true power of Chakra, which he easily could through the help of Ten Paths.
As for why Jigen or Isshiki were so much stronger than Naruto and Sasuke.
It was simple. He stayed in the Ninja World for thousands of years.
While Otsutsuki had inherent advantage thanks to their race, humans had evolved so much in those thousand years.
Tobirama alone created a Jutsu that could rival Otsutsuki's space-time Jutsu. Minato created a Jutsu that could be evolved into the levels of Shinjutsu.
Hashirama showed that he could simply absorb the power of an Otsutsuki into himself.
Obito showed the limits of an ability that humans could awaken because of their despair.
Third and Fourth Raikage showed how physically strong humans could become without any connections to the Otsutsuki bloodline.
Second and Third Tsuchikage showed how humans could push past their limits and understand the mysteries of Chakra that only the likes of Otsutsuki could by creating Kekkei Tota.
And humans did all of this without receiving proper guidance about Chakra, even forgetting the true meaning of Chakra.
Human creativity had no bounds, and Isshiki, living among the humans, would gradually come to understand this.
Chakra was made out of physical and spiritual energy. Even if he didn't fight, just by trying to replicate what humans did, he could easily improve his spiritual energy.
Ninjutsu, Taijutsu, Genjutsu, Sealing Jutsu- everything related to Jutsu could improve Chakra.
People like Rock Lee and Might Guy could only focus on Taijutsu because they couldn't achieve their full potential through others.
But Isshiki could. He could practice all of them to improve his Chakra. Without even eating the Chakra Fruit, he could constantly improve his strength.
Of course, he would hit the limit, and that's probably why he was in such a hurry to find a proper vessel and plant a Divine Tree on Earth.
Even so, Naruto in his Baryon Mode was able to fight him to a standstill and even dominate him for as long as that mode lasted.
That was very impressive considering how much weaker Naruto was compared to Isshiki.
But now, Naruto had none of those limits.
He could use Baryon Mode forever. Even more so, his Chakra was no longer the same. He had inherited the Otsutsuki Chakra.
This meant he was combining Otsutsuki Chakra with the Nine-Tails Chakra to produce even stronger Chakra.
His strength was beyond what he achieved during his battle with Isshiki.
So, no matter how powerful Luffy was in his world, he was getting demolished right now.
There was nothing he could do.
The gap was so big that he was truly at his edge.
But Luffy had something in his sleeve, a trump card.
A dangerous trump card.