How is it possible for current to flow in a circuit with a capacitor since, the resistance offered by the dielectric is very large. we essentially have an open circuit?
A major part of the answer is found within the title of your question.
"How does current flow in a circuit with a capacitor displacement current concept"
I.e. A major part of the answer is displacement current. Polarization current is another part of the answer.
We usually think of electric current as the flow of charges. This kind of current is called conduction current. However Maxwell introduced another kind of current, which goes by the name displacement current. Displacement current is a field concept. It can flow through "empty space" without any charges present! We can detect it, because like conduction current, it generates magnetic fields.
Displacement current at any point in space and time is proportional to the rate of change in the electric field at that point in space and time.
What happens in a capacitor when an emf is applied to its leads is that electrons begin to flow into the capacitor on one side and out of the capacitor on the other side. When they come to the dielectric, they are unable to cross it, so they accumulate on the plate. On the other side, electrons are leaving the capacitor plate, but no electrons are moving in to take their place, so an accumulation of net positive charges takes place there. Charge density creates (variations in) electric fields. So, the electric field within the capacitor's dielectric builds up as the charges accumulate on the plates. This change in the electric field, for all practical purposes, IS, the displacement current. There really isn't much else to say about what displacement current actually consists of.
If there is matter between the plates of the capacitor, i.e. not a vacuum, then another factor is (usually) present, i.e. polarization current. Most matter is polarizable to some extent. Molecules often have electric dipole moments. These electric dipole moments are caused by the molecular being more positivity charged on one side, and more negatively charged on the other. When such molecules are placed in an electric field, they will try to orient themselves within the field. Some reorient more easily than others. When such a molecules reorient, the negative charges move in one direction, albeit not very far, and the positive charges move in the other, again, not very far. This is know as polarization current. It occurs in virtually all practical capacitors to a great or small extent. Air polarizes very poorly. Certain ceramics polarize a great deal. This ability for materials to polarize is responsible for their dielectric constant. Polarization current, though the charges do not move far, "consists of" a movement of charges.
If we consider only conduction current, then there are situations, like the plates of a capacitor just discussed, where the current into a volume does not always equal the current out of that volume at that instant. However if we consider BOTH conduction current and displacement current as current, then it is always true that the current into a volume exactly equals the current out of that volume at any instant.
The fact that current into a volume equals current out of that volume is known as Kirchhoff's Current Law (KCL). Whether or not there are exceptions to KCL depends upon whether we mean by current BOTH conduction current and displacement current, or whether we mean only conduction current.