It’s a good point. On one hand, the story is clearly mythical. On the other hand, myths exist for a reason, and as a “just so” story it does seem to have a valid function as an explanation for the abandonment of an actual practice. And yes, it would explain Abraham’s kind of *shrug* reaction to Yahweh’s demand — which seems utterly alien and unthinkable to us today, but perhaps to the ancient Hebrews it read more like a once-common but morally outdated practice, like how we view owning slaves today.
Also, it’s not like human sacrifice is unheard of in human history, so “the Canaanites practiced human sacrifice” doesn’t strike me as an extraordinary claim.