Two indicators that its not to be taken as a literal event by us:
- Killing Isaac would be murder in the pentateuch
- Jeremiah 19:5 "They have built the high places of Baal to burn their children in the fire as offerings to Baal—something I did not command or mention, nor did it enter my mind."
The question is why is this story there.
@leov says its a teaching tool. Abraham is a peacemaker. When his name is Abram he has a treaty with five tribes, and later he visits the king of peace, Melchizedek. At this meeting Abraham turns some kind of corner, but the story doesn't flesh it out. Maybe this incident with Isaac it is to illustrate that Abraham's mission will not fail. The rest of the world probably thinks that he and his kind will be wiped out by the nations, but he just keeps going. The world thinks his efforts are pointless, but we're being made to see that no they aren't pointless. Its not wrong to put war away, to cry instead of reeking vengeance on every insult. His son Isaac, and his grandson Jacob also are peacemakers.
This is how they differ from Esau and Ishmael. You can see them pacifying enemies in the stories. Its Abraham who thinks that peacemaking is the wave of the future, but the nations don't believe it and think its nonsense.