This verse is often used as a justifying proof text for allegorizing biblical narratives. Here Paul is saying that the ancient conflict between Abraham's wives, Hagar and Sarah (the mothers of Ishmael and Isaac, respectively), was a spiritual allegory, depicting the conflict between law and grace.
Many of the early church fathers indulged in such an allegorical approach to Scripture, attempting to harmonize Christianity with Greek philosophy. Modern theological liberals often do the same thing whenever modern scientific philosophy seems to conflict with a biblical narrative. The most important example is the story of creation in the very first chapter of the Bible. The allegorical interpretation of this record denies its historicity, but tries to retain its supposed "spiritual" message by finding a devotional application in its narratives. Similarly, the record of the fall of Adam and Eve in Genesis 3 is explained away as an allegory of the yielding of "every man" to temptation.
However, the only narrative actually called an allegory in Scripture is the one mentioned in our text. In fact, this is the only time the word for "allegory" (Greek, allegoreo) is used in the Bible at all. It is significant that Paul's use of the word does not suggest in any way that the story of Hagar and Sarah was not real history. There are numerous other references to Abraham, and at least three to Sarah, in the New Testament, and all clearly treat them as real persons.
This biblical example, therefore, tells us that if we draw allegorical applications from its historical records, it can only be on the basis that the events themselves really happened. HMM http://www.icr.org/articles/type/6/