Hmm I'm getting somewhere with the history of this.
Check out 100 years worth of maps of the middle east .... http://www.dartmouth.edu/~gov46/
So Palestine goes from being Ottoman (Turkish) and pretty much the whole of the middle east until WW1, when Britain promises an independent Arab state covering most of the Middle East in exchange for support in the war, which went well, but ahem, then we get the British Mandate of Palestine which then gets split up by the poms, and bits get handballed around with the french between the wars,
with almost exactly what is now Israel being called Palestine from September 11!!!,1922. Jewish population is 11%.
Talk of a Jewish homeland builds, is encouraged by Britain and Jewish immigration from Europe begins skyrocketing. Major land ownership disputes with the locals lead to a violent Arab uprising and so the Brits trained up an elite Jewish military force.
Then WW2, everyone starts attacking everyone else, the Brits want to get out, 1945 Jewish pop. 31%.
Oodles of different proposals to share the space, 1947 the UN majority decides to split the space into two states (Australia couldn't decide and abstained ) roughly 50-50, despite the population inbalance. Jerusalem itself supposed to stay 'international' (British controlled). The Arabs are NOT happy with the carveup, and the killing starts.
Meanwhile the neighbouring Arab states have emerged from colonialism and been encouraged by Britain to form the Arab League, but they're militarily distinct and well varied in strength.
The Israelis have been planning ahead and buying up weapons big time, and training.
1948 Britain gets out. War really starts. The US and the Soviets both denounce the Arabs for 'invading'.
Israel gradually kicks arse and eventually gets most of the land, keeps Jerusalem, and we're left with only two Palestinian "settlements" at the extreme southwest (Gaza) and east(West Bank). Refugees all over from both sides. Reprisals all round.
It hasn't really got much better since then. And I reckon the Arabs got screwed out of their land pretty royally, and it wasn't just by the Jews, although they picked up the ball and ran with it given the chance. Some huge deceits by the West all the way through.
And every attempt by the Arabs to defend their turf gets labelled 'terrorism'. I dunno why they get explosive shirty.