Well Muhammad lived with Jews and Christians, and they lived with him, all in the same city. They continued living there because they had an agreement, the Jews and Christians (mainly the Jews) would live in peace and security, be able to continue their trades, worships and cultural ritual. Some converted, many didn't- there was no compulsion to convert- the Muslim Holy Book disallows forced conversion. You can look up the Hudaibiya Treaty for more info on this.
Mohammed treated them with so much respect. In fact Mohammed and the king of Ethiopia, who was a Christian were allies as they allowed them to live there. Mohammed was respectful of them as the Jews and Christians are the people of the book. And Muslims should be very tolerant towards them.
The Prophet Muhammad sallallahu alaihi wasallam did not try to hurt anybody. The only time he fought with them was when they attacked muslims for self-defense.
Its like when you walk down a street and pass by a stranger you dont know, tou arent going to hurt him unless he starts hurting you.
Christians and Jews are still believers in God and follow other prophets which we believe in like Prophet Isa alaihis salam (Jesus) and Prophet Moosa alahis salam ( Moses), so the Prophet respected them and wished for the best for them