The Brazilian team he played in, Santos, was not really a great team when Pele arrived... but once Pele showed up, that team became a win-everything team, 23 titles including two world championships, for over 10 years. Some claim Pele's Santos was one of the greatest teams to ever have played football. Wherever they went, it was a full house, and they did tour outside Brazil, but not very often, sure. In any case, Pele's fame is in no way exagerated. He won 3 world cups, something nearly unheard of even after all these years, won every championship Santos tried (his teammates were also amazing [1], of course - but Pele's prominency has never been questioned by anyone, specially his teammates) for a really long time... and he just made the game beautiful with every touch... watching his works in situations that did not even end up with a goal has always been as popular as watching his most amazing goals as I grew up.
You should look up how the tournaments were organized back then, you can't compare to things today.
In many Libertadores editions in the 1960s countries only had one spot. In some years Brazil as a whole was denied a spot: 1966, 69 and 70 Libertadores didn't have any Brazilian teams whatsoever (and in both 1966 and 69 Santos would have played).
Even the national championship wasn't "national", as there was only one spot per state, so states with great teams (like the state of São Paulo) would only have one team competing (either Santos or Palmeiras back then).
So Santos only had the chance to play in 4 Libertadores, out of 7 that Brazil was allowed, and won 2. That's a pretty good record. If there were as many spots as there is in UEFA Champions League today history might've been very different. Santos might've won more, or none.
If you applied the same standard to Real Madrid today you'd have a different outlook, as they were only Spanish champions 3 times in that period, so mainly ineligible for most of the CLs they won, and only once were they the Spanish champions before a CL win.
What about Messi's Barcelona? And Manchester City in the past 5 years, by your estimation, could not be considered better than their opposition due to having won no Champions League? I think your standards fail the smell test, but more importantly it is anachronical to suggest the Libertadores was the foremost soccer tourney at the time.
I don't really think comparing across eras is a good thing, but to your last point about CL organization - Madrid did win the first 5 CLs when they were organized in a manner that allowed only the champions from each country to enter.
[1] Pele & the immortal Santos of 1960-1969 https://imortaisdofutebol.com/esquadrao-imortal-santos-1960-...