"I'm very happy with what we look like this year," the Knicks legend told Babcock on the "TMZ Sports" TV show (airs weeknights on FS1) earlier this week.

"I do believe Jalen is the best player or he's definitely the most valuable, running the team and getting the people to their right spots."

Brunson -- who Johnson calls "nephew" (LJ was teammates with Jalen's dad, Rick Brunson) -- has been playing lights out since signing with New York for $104 million last July. At the time, pundits called him overpaid. Now, it's called one of the most team-friendly contracts in the sport.

Jalen's averaging 23.8 points, 6.2 assists and 3.5 rebounds per game.

During the season, the Knicks traded for Jalen's former Villanova teammate, Josh Hart ... and Johnson loves the move, lauding the former Blazers forward for being "a dog on defense."

"That's that New York mentality," Johnson said.

With Brunson playing like an All-Star, Hart's hustle, and the Knicks in fifth position in the East,  Johnson doesn't believe the Knicks will be a one-and-done playoff team.

But, he doesn't foresee a ticker-tape parade, either.

"Definitely don't see them winning the championship this year. I see them going far," the 54-year-old said. "I can definitely see them winning the first series."

We also asked Larry -- an NCAA champ at UNLV -- about this year's tourney and the endless shocking upsets ... like number-one seeds Purdue and Kansas, amongst other teams, being sent home early.

"I like that," the former #1 overall draft pick said. "I like it being more competitive. I mean it didn't happen as often when I was around."

"I much love this more competitive tournament than like a blowout tournament."