The world number 25 faces world number one Mark Selby in the quarter-finals of this season's event after beating Luca Brecel 6-4 in the last 16.
"I got thumped 6-0 by the greatest player to ever play the game. It was a learning curve," Selt told BBC Sport.
"I was a rabbit in the headlights but I feel I am a far better player than I was 12 months ago."
O'Sullivan scored a 147 in that victory over Selt and went on to win the tournament, but he decided not to enter this season's event at the York Barbican.
The Romford-born potter added: "With Ronnie not playing at the minute, Stuart Bingham - the world champion - not really firing on all cylinders, the biggest name is the world number one and playing Mark is an occasion I will relish.
"Playing Ronnie last year meant a lot to me last year and I didn't perform at all.
"The occasion was quite big but I think I froze more with the player I played. I have always been in awe of him because of his snooker ability and I think that was a massive factor."
Selt had been scathing when assessing his own form in reaching the fourth round, describing it as 'pretty terrible'.
He was pleased with how he recovered from a 3-1 mid-session deficit to beat Belgium's Brecel, the world number 41.
The win means Selt has already pocketed £20,000, the biggest single payday of his career.
"I felt super calm for some reason," he said. "I felt really good. The money is good but is irrelevant really.
"I felt if I could dictate the safety play I would always create chances. After the interval I managed to dictate the pace of play and my safety game was far superior."
Selt could add another £10,000 to that prize money by beating Selby for the first time.
"I am getting older and more used to the occasion and the set-up and I am really looking forward to walking out there on Friday," he said.
Matt Selt says his humiliating loss to Ronnie O'Sullivan in last season's UK Championship has improved him.