I agree with everything that you said, Madrid has all the superstars in the world from the history and is the strongest in European competition. However, Atalanta only has average players that looks very strong due to their current form. When analyzing on a football match, you check if the teams are in form or not. Real Madrid is not in form like previous seasons which gives Atalanta the chance to win the match, because they are in form.
In the UEFA Champions League, it's never advisable to underestimate any team because for a club to qualify for the UCL, it means they're already Champions in their various perspectives leagues. Atalanta is no average team, do remember they were the ones that break the longterm unbeaten record of Bayer Leverkusen previous season, thrashing Leverkusen 3 nil in the Europa League, you forgotten all that so soon? Carlo Ancelotti wouldn't jeopardize his odds when he sees one. Real Madrid have the perfect shape to continue hitting on competitive oppositions but they're also having a rough time winning games despite having the perfect squad to win competitive titles this season, what's holding them from having a smooth season? The new players are finding some difficulties to adapt to the new style.