My three girls (4, 7,9) loved the story! It was definitely one of our favorites this year. We read it at the beginning of the year and they still talk about it, even the 4yo.
When we read it, we were actually studying about Jewish holidays (with another curriculum) so it tied in well.
We had actually recently celebrated the Sabbath as a family. So the girls did understand a little.
As far as the incorporation of the Jewish holidays, we talked about how the family is Jewish, what that means, but also how even Jesus had celebrated these holidays. He was a Jew too

. As far as discussing the Jewish faith now, we have explained how the Jewish line is where Jesus comes from, but for now the Jews have not yet met their Messiah. Yet there are some Jews that have. And we have prayed for them as a family.