Even though Isco scored a double and the two center backs played brilliantly, it was Luka Modric's game. Real Madrid didn't start the game well, as the players were turning the ball over constantly until the Croatian player started to control the game.
These are Real Madrid's average positions during the match against Athletic Bilbao. As you can see, the team's midfield is quite oriented to the right part of the pitch, with #19 Modric and #6 Sami Khedira balancing Real Madrid's lack of presence on the right from the offensive line. However, Isco, Cristiano Ronaldo and Karim Benzema drift to the left part of the field, so Real Madrid pretty much have a balanced defensive presence.
Since Isco, Benzema and Cristiano Ronaldo are already in that part of the pitch, Marcelo doesn't need to go forward as much as Arbeloa, who needs to help Di María a lot more and will find a lot of space. Marcelo has a much more offensive-minded approach to the game as he's used as a way to get the ball out of Real Madrid's half.
As you can see in this other image, most of Marcelo's passes were used to create some kind of play and therefore find the right teammate. Arbeloa, however, was found in a much better position but his defensive and less aggressive approach to the game forced him to complete more secure passes, mainly to Pepe or Sami Khedira.
So, with that in mind, what's Ancelotti's system? If you take another look at the Average Positions above, Real Madrid is playing a really odd 4-3-3 formation. Isco had a lot of freedom to go forward but he's Ancelotti's third midfielder. But what makes this system so odd is that Ángel Di María's willingness to work is just excellent and allows Real Madrid to have an all-round player that can attack and defend both. Another midfielder, then. Therefore, if we add Di María to the equation, Ancelotti is currently playing with a 4-4-2 formation in which the strikers tend to go to the left side of the pitch to leave a clear path to Di María.
That left side is where Real Madrid's most creative players are. Isco, Marcelo, Cristiano Ronaldo and Modric together are no joke. They are so skillful that they are still able of creating dangerous plays even with many defenders around them. See this goal to get a quick example of what these players together can do. That's a way to break down the defensive wall at its best.
If Real Madrid decide to continue with this formation, new signing Gareth Bale will surely enjoy that space on the right wing very much if Isco, Modric, Marcelo and Cristiano Ronaldo can find him. The defense will surely be focusing on Real's left wing and therefore Bale will feel more comfortable and will attack that space really effectively, but we will take a further look to Bale's tactical influence in further posts.