In a development that has left the football world collectively rubbing its eyes, League Two side Fleetwood Town knocked Premier League champions Arsenal out of the Carabao Cup on a wet and windy Tuesday night on England's north-west coast. The result, decided on penalties, was as unexpected as it was delightful - unless you're an Arsenal fan, in which case it was probably just another Tuesday.

But this isn't just a fairytale of giant-slaying. Fleetwood and Arsenal share a history that predates Tuesday's upset by decades. Arsenal played at Highbury until 2006; Fleetwood's ground is also called Highbury, named after the adjoining Highbury Avenue. The club also wears red shirts with white sleeves, a nod to the classic Arsenal kit. Why? According to Ray Curtis, a barman at the town's King's Arms, "Fleetwood's first ever kit, the home kit, was given to them by Arsenal." So really, Arsenal have only themselves to blame.

In the 2000s, not long after Patrick Vieira captained Arsenal, Fleetwood boasted a namesake star: Brazilian striker Magno Vieira. Coincidence? Almost certainly, but it's the kind of detail that makes you wonder if the universe has a sense of humour.

At the 5,300-capacity Highbury on Wednesday morning, the floodlights Fleetwood had hired for the occasion were being packed away. "It's back to reality, back to being a League Two team, that's our normal," said Zsofia Wright, the ticket office and retail manager. The excitement had started early on Tuesday. "We started getting what team had turned up, who'd flown in, and the whispers started, and it's like, 'oh, they've gone quite strong,'" Wright said. "So we were all planning to just enjoy the occasion. And then obviously, we went 1-0 up and everyone was kind of looking at each other, like this isn't supposed to happen." When Arsenal equalised, she said, it was back to reality - except "the clock kept on going and the score didn't change." After the dramatic penalty shootout, everyone was on the pitch. The next stop for players, fans and management was the stadium bar. "Just incredible," Wright said. "We were here till about half one last night. It was brilliant, amazing."

"The atmosphere was crazy," said Chris Newman, 33, who attended with his son and returned to the club shop on Wednesday to pick up two souvenir programmes. "Everything happened so quick. I just didn't expect it at all." The shop has done a roaring trade over the past 36 hours, with half-and-half Fleetwood and Arsenal scarves proving especially popular. One buyer with a London accent said, "I'm a Spurs fan, it's brilliant."

Wright said the town was abuzz the morning after: "Bars, pubs that are struggling, they were open till God knows what time yesterday. We just hope it can continue throughout the season, just hope that attendances start to pick up, and get consistency back again through the gates." The club's nicknames - The Cod Army, The Fishermen, The Cods and The Trawlermen - all derive from the Lancashire town's fishing industry. Nothing says "giant-slaying" quite like a cod.

Sharon Brooks, visiting a fishmonger by the harbour, said: "We thought it'd be three, four or five nil, but they did so well to get a draw and then win on penalties, and five brilliant penalties. It's nice for a town like Fleetwood, and [against the] Premier League winners last season, they just surprised you didn't they?" Her 12-year-old son, Ryan, an Arsenal fan, added: "Even though I wanted [Arsenal] to win it, I'm pleased for them." A gracious loser - someone get that kid a medal.

In the King's Arms, everyone was eagerly awaiting Wednesday night's draw to see who Fleetwood play next. Donald Maclean, who missed the game because he was on duty at a nursing home, said: "I saw the goals this morning and I was delighted, over the moon. Imagine Fleetwood taking down the Gunners! Never been heard of before, so yes, we're all delighted about it. Brilliant!"

The victory delighted fans partly because it was so unexpected - Fleetwood sit 84 places below Arsenal in the football league pyramid. Michael Houton said he thought the result impossible "because Arsenal shouldn't have got beaten shouldn't they? Not against Fleetwood." Paul Dagger was so pessimistic that he staked £200 at half-time on Arsenal to win at odds of 10/7. "Gyökeres [of Arsenal] scored within five minutes of the start," he said. "I thought, oh here we go, money's coming in now. You live and learn." Indeed.

Fleetwood fans hope this is the start of something bigger. "The town needs it," Dagger said. "As you can see, it's full of charity shops and vape shops." Gary Gill, a retired crane operator, said: "I am a Fleetwood fan and I think it's fantastic for the town. It's going to bring coin. If they play with the determination they did last night, any team that comes to play now is going to be frightened. And normally, that's not the case, they think it's an easy win."

Jim Buckley said: "It's magic. We're a Mickey Mouse town of 25,000 people, there's no train station. I mean at the Emirates, they can fit three towns the size of this town in there." He wasn't far off - Arsenal's stadium holds 60,000 fans.

The drinkers in the King's Arms said the travelling Arsenal fans had a good day out despite the embarrassing defeat. Dagger said: "Two pound twenty a pint in here, two pound fifty a pint over the way. They couldn't believe it, they were going, facking 'ell, it's eight quid where we are." Ah, the real magic of the cup: affordable beer.

Back near the harbour at the Shark Chippy, there was a lunchtime rush. Dishing up cod and chips, Bethany Taylor said she lived near the ground and could tell the final score from the roar of the crowd and the flares. "It was good, brilliant," she said. "We weren't expecting it." Her colleague Louisa Smith added: "It's an incredible result isn't it?" But do they think Fleetwood can lift the Carabao Cup? "It'd be a struggle, but hopefully they will," Smith said. "We wish them luck." And really, isn't that what football is all about?