Both Admiral/Yonko fans stretching this scene.
Luffy didn't really quit the party, he was sitting and observing what's going on with Z/S/J ready to take action if needed.
His smile at the end indicates that Aramaki stood no chance at all but that doesnt change the fact that Aramaki could beat the shit out of everyone in Wano in a 1vs1 not named Luffy.
Hell i could see even Luffy losing one round against Aramaki due to his stupidity but thats it.
Serious opinion?
He was outside the city walls where the actual party was taking place, coincidentally with his 3 strongest men. it looks like he did quit the main event because he sensed a strong presence to me. I guess naysayers can argue he was just taking a breath of fresh air with his buddies though.
While I never argued Ryokugyu would win against all the opposition (only Kinyagi did tbh) , the smile is a weird way to powerscale considering it happens a moment after Ryokugyu's left. And Luffy was also in good mood from feeling Shanks nostalgic presence.
Maybe Luffy was focused while observing the battle and using FS, ready to jump the moment Momo was in danger of death , or maybe he was laughing the whole time at Ryo's puny powerlevel.
But it's all headcanon, so using it either as a wank or downplay is strange.