I’ve always said that the Tower of Babel is one of the harder parts of the Genesis to reconcile with real history. Paul H. Seely (you may know him) has wrote an article in 2001, 2001 The Date of the Tower of Babel and Some Theological Implications, Westminster Theological Journal 63:15–38. where he basically argued that the narrative cannot be reconciled with real history and is instead a nonscientific relic of accommodation. But I find such a conclusion to be unsatisfactory, for why would it be there in the first place? Seely argues that it is hard to reconcile a regional Babel event with scripture, for no Christians or Jews did so until recently. However, Seely ignores that we have been without ANE texts for thousands of years, so understandably we may misinterpret an event as being worldwide. For by his own admission elsewhere:
Ancient Near Eastern kings, regardless of the real size of their empire, were throughout the first millennium B.C. (and earlier) regularly described as rulers of the entire earth. Thus the kings Tiglath-Pileser I (1114-1076), Shalmaneser III (858-824) and Esarhaddon (680-669) were all described in inscriptions as “king of the world … king of (all) the four rims (of the earth).” Xerxes (485-465) says, “I am Xerxes … the king of this (entire) big and far(-reaching) earth.” Nebuchadnezzar II himself says, “. . . (from) the Upper Sea (to) the Lower Sea [which means the whole earth continent]” and adds, "I have made … the city of Babylon to the foremost among all the countries and every human habitation."30 As will be seen below ancient Egyptian kings also regularly claimed to rule over the entire earth. In all of these inscriptions it is the literal entire earth, that is, the entire flat earth-disc which is described as the extent of the king’s dominion. Interpreted within their historical context, therefore, the words, “all the earth,” in Dan 4;11 and 20 (being a description of the extent of Nebuchadnezzar’s empire) refer literally to the entire earth.
We see then that in the ANE context it is very possible for ‘The Whole Earth’ to be an area less.
In addition a local Babel event may help to explain culture change between the Ubayid Culture and the Sumerians, as this article explains (though I am wary of relying on information from this website).