I was about the same age when I first saw it.

I think you put it quite succinctly when you say that the film makes the fantastical seem pedestrian. The characters dont react to those things we find astonishing. It lends itself to the whole ‘used universe’ aesthetic Lucas was going for.

Even when Ben introduces Luke to the lightsaber, you dont see Luke reacting with amazement. He takes it, looks at it with brief curiosity; his hand resting right where you might expect an ergonomically placed switch to be and he activates the lightsaber naturally. No big reactions. Ben does the talking. He says its the weapon of the Jedi. Its his fathers weapon and Luke does not speak of the lightsaber but his attention goes immediately to his father…to the story. In this world of amazing imagery its still at its core an intimate story. It becomes bigger as the story continues but it allows the viewer a chance to settle in.

They walk into the creature cantina and it is a spectacle of alien races of all types. At the bar, Ben is already engaged in a conversation with the Giant Dog. There is no big entrance of the Giant Dog. He’s just there among a host of other odd looking creatures. He’s not chained. He’s not in some cage that they have to break him out of. Your introduction to him is not a cheap showcase of incredible strength.

Yet there are parts of the film where its fantastical nature is on full display. The opening scene with the Star Destroyer is all pomp and circumstance.

I have no idea how Lucas managed to keep the fantastical and subdued in proper balance but he did. It is either intentionally or unintentionally a well executed piece of cinema.