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It's a complex topic but brief summary. Palestinians are essentially broken off into 2 areas.
West Bank - An Israeli military controlled police state since the 60's. Think North Korea but the government has more resources at their disposal. There are different enclaves within it and Israel routinely sets up illegal settlements by force in the area. This area is run by Fatah, the more moderate party. They hate Hamas and would be most willing to work on diplomatic solutions.
Gaza - You've heard the phrase open air prison and that's probably the best way to describe it. It's a 25 mile strip where 2.3 million people live that cannot leave. All essentials (electricity, food, supplies) are at the whim of the Israeli government as they have a blockade. There is not clean drinking water for most. Very few schools or medical services. It's about as brutal place as you can imagine. Gets bombed regularly and is run mostly by an extremist group called Hamas.
That leads us to now. The current Israeli regime is very far-right and does not support a 2-state solution. So they made the decision to form a wedge between Fatah and Hamas. They've propped up Hamas for years which has allowed them to amass some weapons. The theory is that if your main enemy is the extremist group, there won't be pressure for a 2-state solution. This plan has backfired spectacularly.
Now it's important to mention that this attack is unprecedented. Hamas has had its attacks but they rarely advance into Israeli territory and rarely lead to this kind of death toll. The fact they were able to overrun so many military outposts and take so many hostages has never happened before.
So that's kind of where we're at. It's unchartered territory. Israel had mostly been fine with a few minor terrorist attacks each year if it meant they could keep their ethnostate and continue to encroach on lands. But the death toll from this is so staggering, that likely changes everything. Their focus will likely move from the West Bank to Gaza for now.
That leads us to these questions that no one has an answer to:
1) Does Netanyahu survive this? Public polls blame him for the failure and his strategy backfired. But he's also made strides in weakening the democratic process in the country so he can be a sort of dictator. Will public pressure force him out or does he dig in?
2) What happens with Gaza? It seems you can't just imprison millions on a small strip of land without some repercussions to citizens elsewhere.
3) Does the conflict expand? Hezbollah could get involved from Lebanon, although I think they'd like to avoid it. Will Iran be dragged into this to cover for the failures of the Israeli intelligence? Do other arab countries gain confidence now that Israel's intelligence and defense has not been as great as people assumed (similar to what we've seen with Russia).
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