Many classical mythologies had basis in reality: the Iliad is a great example. Why are we so sure Atlantis is a myth (or allegory) while the stories of the Bible are based on real events? It’s just not that simple.

That's very simple: because Atlantis was presented as an allegory by its inventor, while most of the Bible was intended as history. Wondering where the real Atlantis was makes about as much sense as asking who was the historical prodigal son...

We know Europe is a real place and that actual countries called France and the UK existed at the time HP is set in.