Basically, the author of this passage is establishing a distinction between what we would call realism in literature and fantasy. Since the eighteenth century, the writer says, literature has been concerned chiefly with the real world. But in the "beginnings of a literature," in pre-modern epics and storytelling, unreal worlds were depicted, in an effort to make the unfamiliar, the "amazing," familiar to people. This concern with the unreal expressed the curiosity people naturally had about areas on earth that were outside their experience—over the ocean or only the "next ridge."
The archetypal setting of the science fiction story from the distant past forward is the island. The moon, as well, is a kind of island in space. At the same time, another model setting is the valley, which the writer associates with the primal concept of the "next ridge" beyond the inhabited world of early man. Man longs for a utopia, an alternative world, and the Garden of Eden is a "localized" version of a utopia. The thinking behind the imagining of such utopias is that anybody who believes his own local world—his own "valley"—is the entire world, is "blind." The imagined inhabitants of these "islands" or "valleys" are a mirror of mankind, of real people, but they are also a transformed version of actual humans: something different from them, and better.
All of these imagined worlds, the settings in which science fiction takes place, are the result of human curiosity, says the author. But they're also expressive of the wish to find an ideal, a better, setting than the real world. People hope to find in the unknown not only a superior environment to the real one, but a kind of emblem of supreme good lacking in the actual world. Even if such a world has not been found, the belief at the root of science fiction is the assumption that it is possible.
The above is an attempt at a paraphrase or explanation of the quoted passage. But what, one might ask, is the overall point the author is making? He or she seems to be intent on a definition of science fiction and the reason it is such an important literary genre. Science fiction is a kind of focused expression of a category of ideas that inform literature in general. Even before the term was used, science fiction was basic to people's imagination and to literature. The fantasy elements in Homer and Virgil and in the medieval and Renaissance epics as well are the obvious examples. In some sense, the realism the author identifies as dominant since the eighteenth century is a divergence from the older focus on the unreal and fantasy, which reasserted itself beginning in the nineteenth century in Jules Verne, H.G. Wells, and their successors, including the utopian and dystopian writers, as the author indicates with his view of the utopia as a central idea of the science fiction genre.