I have a feature class made up of several small polygons. I want to create a new feature class that represents the area outside of these small polygons. The goal would be to create a feature that represents the blue area in the picture to the right below.
i think the simplest way is to create a new polygon using the draw tools which covers your extent/area. Use this polygons as input features, and the original polygons FC as the erase features in the Erase geoprocessing tool.
https://pro.arcgis.com/en/pro-app/latest/tool-reference/analysis/erase.htm
@JessicaKnapp21 Can you also try the Difference Polygon tool? The tool requires Defense or Production Mapping license.