The whole idea of Biblical literalism in the days around the beginning of the Common Era would have been perceived as being laughable.
Let's consider pagan myths of the time--the dominant religion of the time, I might also add. Mythology was not consistent or coherent and no one seemed to think it should. Greek mythology had a number of description of the creation of the world, or the life stories of various gods, demi-gods and heroes, and typically they were not mututally compatible. Anyone who studies mythology can see this right away.
What does this mean? The dominant religious context of the day was not literalist and was internally inconsistent. Why would those writing the Bible have felt the need to provide something that no other religion provided?
Further, let's consider the literary situation, particularly as it came to history. The truth is that even our notion of modern, accurate history didn't exist. Historians freely embellished what they knew, often producing accounts of history that seemed to widely vary between authors. Modern historians are left to look for authors closest to the source and compare what the texts have in common, and deem questionable what they don't. This was not perceived as fraud in Roman times. It was expected literary license.
Let's make a connection with the religion again... there was a Muse of history (Clio), which could lend credence to the idea that history was as much inspired as researched.
This is the context under which the Bible was written. Literalism and accuracy were not things that were particularly highly valued in myth or historical documents. And if the authors themselves didn't expect their writing to contain these things, how can modern readers expect to find them?
And the sad thing about this is, a class or two in classical history/mythology would clear this up.