In the Old Testament God confined the atonement only to the Israelites because His OT covenant obligation (the Mosaic covenant) was only to His chosen people Israel. It was only a temporary covenant which later was fulfilled by Jesus with the New Covenant to cover the atonement for everyone.
From OT Israelites's perspective, they had a covenant with Yahweh, the God of Abraham, Isaac, and Jacob. Other nations had their own gods with their own covenants (the Philistines had Dagon, the Moabites had Chemosh, and the Canaanites had Baal). The covenant responsibilities for Israel was spelled out in the Torah (including Leviticus) which applied only to Israel. This was Henotheism which later on became Monotheism where Yahweh became the supreme God over all creation.
There was no concept of hell at the time. Everyone thought they went to Sheol when they died, regardless of their nation (it was a common understanding in ancient times, at least in Mesopotamia). Only after the OT period was over (after 400 BC), when Persian and Greek influence came into the area, that there started to be a discussion of the resurrection of the righteous to heaven and punishment for the wicked in hell, which became the background idea of life after death in the various schools of early Judaism at the time of Jesus and the apostles.
After Jesus died on the cross, he went to preach the gospel to those souls in Sheol ("spirits in prison", 1 Peter 3:18-20). Then they went either to heaven or hell (see my other answer). Christians who are inclusivists (distinct than universalism!) believe that people who never had the gospel preached to them will also receive gospel presentation from Jesus after they die (post-mortem evangelization).