Did all the people entered in the religion of Allah (swt)?
Of course not, this is not the meaning. That is why when the Prophet (saws) said:
“I have been commanded (by Allah) to fight people until they testify that there is no true god except Allah, and that Muhammad is the Messenger of Allah, and perform Salat and pay Zakat. If they do so, they will have protection of their blood and property from me except when justified by Islam, and then account is left to Allah”.
This does not mean that he (saws) would fight all people, but just those who would fight him (saws).
 Sahih Al-Bukhari, Book of faith, Hadith No. 25