If they believed it literally, then they were strange indeed.
It's only in modern times--since the Enlightenment--that people are so fixated on the "factually correct." Religious people have always used metaphor and myth to describe the holy and the sacred. We discount metaphors, even though we use them every day. And we see myth as "fable" instead of a narrative that is within us and without us as human beings.
Is it that everyone knew they were only parable back then, or that they thought they were history back then, but now think they are parable right now?
Ancient people could hear those stories and not ask that question about literal truth. If they believed them, they were true. If not, not.
I find those ancients just like us and us moderns just like them. In matters of vital importance, moderns and ancient alike acept or reject stories far more on an ideological than an evidentiary basis. We too, Enlightenment or not, ask far too seldom: "Yes, but is that literally true?"
Both sides are definite, articulate, and unyielding. Neither side ever mentions a single shred of evidence either way. The story of JFK is true or false depending on the hearer's ideology. It is accepted or rejected as a metaphorical summary and symbolic condensation of one's vision of reality.
We began [with the Enlightenment] to think that ancient peoples ("other" peoples) told dumb, literal stories that we were now smart enough to recognize as such.
Not quite.
Those ancient people told smart, metaphorical stories that we were now dumb enough to take literally.