Indeed, religious myths are all patently absurd from an atheistic perspective. I'd go further and say that every single pastime is strange and absurd from an outsider's vantage point. Pick your game, sport, or artistic or business endeavor. From a cosmic perspective, for instance, everything we say or do is preposterous vanity. Ecclesiastes said that long ago.
But the point of religious myths, I think, is the same as the one made by poems. The proper point is phenomenological, meaning that it's to express what it's like to be in a certain tribe or to be engaged in some project. The Jews found themselves surviving repeated catastrophes and subjugations, so they felt divinely tested. Or rather they told stories to shore up their confidence, to build up a culture around this image of the suffering servant.
If taken literally, the idea of a parent who plays favourites is hardly a moral one. But who says a good story needs to be politically correct?
The useful question about Judaism isn't whether the Jewish myth is literally true, or whether God chose Jews to send humanity a message. The point isn't that Jews have a real covenant with a personal creator of the universe. Rather, the humanistic point, at least, is that Jews endured by finding meaning in their historic struggle. Jews made their culture and their tribe into a great artwork. It's all just art, events that have more or less meaning.