Some people get all tied in knots about the fact that what might have been realism to our progenitors is now fantasy to us, because we no longer believe in supernatural things. But this is nonsense. What is science to one culture may seem magic to another (as Arthur C. Clarke pointed out), but this only goes to show that the presence of "magic" in a fictional work doesn’t suffice to make it a fantasy. On the other hand, a work of non-fantasy doesn’t suddenly become fantasy just because we learn a few extra facts.
It may be that the Odyssey affects us differently than it did the Greeks—I happen to doubt it, but who knows?—but, if so, this is not primarily a difference in belief. Modern readers of "taproot texts" have a tendency to see any ancient text as "the Bible" of whomever. Personally, I think that the way the Greeks heard the story of Polyphemus is probably closer to our reading of a modern fantasy novel than to the Hebrews' belief in the giving of the Law on Horeb. In fact, belief is a major limitation in story-telling (and not necessarily a bad one). The Puritans believed in witches, but they didn’t make up fantasies about them.