Because the Nobel committee felt his writing expressed "universal human conditions".
According to the official Nobel Prize website:
The Nobel Prize in Literature 1978 was awarded to Isaac Bashevis Singer "for his impassioned narrative art which, with roots in a Polish-Jewish cultural tradition, brings universal human conditions to life".
Alfred Nobel's will states that
[Priset] [...] för litteratur [utdelas] af Akademien i Stockholm[...]
or, in English
The award for Literature shall be awarded by the Academy in Stockholm
All the awards are granted by academies based in Stockholm, except for the peace prize, which is awarded by a five-member committee chosen by the Parliament of ...
I think there were several factors here, though of course we don't know all of them.
Not really niche
Firstly, I'd like to address the point of audience. While you say
The audience of his brilliant books are Jews, old Jews, Judeophiles and maybe 1% just randoms
In fact, he also wrote English translations of a lot of his works which were of course ...
In what ways do the winners of these three awards differ?
These three awards are very different, and it's rare that an author collects more than one of the three. The most obvious difference is the Nobel Laureate is a person, whereas the winners of the National Book Awards (NBA) and the Booker Prize are literary works (although the NBA introduced a lifetime ...
The records of the discussions of the Swedish Academy are kept secret for 50 years, meaning that as of the time I'm writing this, the last laureates for which we actually have any real insight into the discussion that took place prior to the awards are Nelly Sachs and Samuel Josef Agnon, who shared the prize in 1966.
For later laureates, we basically have ...