”All the previous lightning flashes pale into insignificance before the blaze of this passage. When Jesus said to the Jews that Abraham had rejoiced to see his day, he was talking language that they could understand. The Jews had many beliefs about Abraham which would enable them to see what Jesus was implying. There were altogether five different ways in which they would interpret the language.
(a) Abraham was living in Paradise and able to see what was happening on earth. Jesus used that idea in the Parable of Dives and Lazarus (Luke 16:22-31). That is the simplest way to interpret this saying.
(b) But that is not the correct interpretation. Jesus said Abraham rejoiced to see my day, the past tense. The Jews interpreted many passages of scripture in a way that explains this. They took the great promise to Abraham in Genesis 12:3: ‘By you all the families of the earth shall bless themselves,’ and said that when that promise was made, Abraham knew that it meant that the Messiah of God was to come from him and rejoiced at the magnificent promise.
(c) Some of the Rabbis held that in Genesis 15:8-21 Abraham was given a vision of the whole future of the nation of Israel and therefore had a vision beforehand of the time when the Messiah would come.
(d) Some of the Rabbis took Genesis 17:17, which tells how Abraham laughed when he heard that a son would be born to him, not as a laugh of unbelief, but as a laugh of sheer joy that from him the Messiah would come.
(e) Some of the Rabbis had a fanciful interpretation of Genesis 24:21...in a vision given by God Abraham had entered into the days which lay ahead, and had seen the whole history of the people and the coming of Messiah.
From all this we see clearly that the Jews did believe that somehow Abraham, while he was still alive, had a vision of the history of Israel and the coming of the Messiah. He was really saying: ‘I am the Messiah Abraham saw in his vision.’...
To us these ideas are strange; to a Jew they were quite normal, for he believed that Abraham had already seen the day when the Messiah would come.
The Jews, although they knew better, chose to take this literally. ‘How,’ they demanded, ‘can you have seen Abraham when you are not yet fifty?’”
(William Barclay, The Gospel of John, Vol 2, pp. 34-36, Revised Edition)