I kinda like the way you defined absurdity, but it's actually more specific than "disputing, in an extreme fashion".
There's actually a term, reductio ad absurdum, that describes this time of argument "a reduction to absurdity".
https://en.wikipedia.org/wiki/Reductio_ad_absurdumBasically, you show someone that a claim is true by showing that to believe otherwise would lead you into something crazy.
Or you show someone that a claim is false by showing that to believe that claim is true would lead you into something crazy.
So when LSAT uses "absurd/absurdity", you want to see a rebuttal in which someone shows that the implications of believing / not believing something would lead to a contradiction, or a foolish statement, or something the other guy would regret committing himself to (in this case, something "pointless"... as P says, "What would have been the point?")
Here, our dude P is showing that M's statement is absurd because of its implications.
M says that someone invented the Greek alphabet in order to record and preserve the oral poems of Homer that had been passed down for generations ("highly developed tradition").
P is saying,
in order to write them, you had to already know them by memory. So why would you need to write them?
in order to write them down for future generations, they would have to be able to understand your writing. But you're inventing an alphabet, so how would they be able to read them? No one else knows your alphabet!
The 'absurdity' comes from those ending ideas:
"Why would someone write something down if they had already committed it to memory? That's absurd!"
"Why would someone expect future generations to be able to read one's writing if one INVENTED an alphabet that no one else knows? That's absurd!"