The way that we understand the Bible is based on the idea that on the “surface” a text can only mean one thing. In Hebrew, the “surface” meaning of a text in known as a peshat. In other words, a text means what it says—whether or not it is intended literally or figuratively. For example, when God promised Abraham that he would be the “father” of a “great nation”—Abraham expected God to give him a son. And, he expected his son to have children until his descendants constituted the “great nation” that God promised him. God intended the promise literally—Abraham took it literally.
Now, in Galatians 3:16, Paul says that the “seed” of Abraham refers not to the descendants of Abraham as a people—but to the Messiah as an individual. In this case, Paul is applying the text to the Messiah in the form of a midrash—a secondary meaning of a text “beneath” its surface significance. This type of application is very important because a midrash and peshat must “fit” together. In other words, a text can only be applied in a way that preserves the integrity of the original surface significance of a text. So, Paul is not saying that the Jewish people are not really the descendants of Abraham—what he is saying is that the Messiah is connected to Abraham in a way that reflects Israel’s connection to Abraham. I talk about this in much more detail in “The Essentials” Seminar which will be available soon.