Here's what I've learned.
After WWI, the UN sanctioned British mandate made two states: Transjordan Palestine to the east of the Jordan River, for the Arabs, now called Jordan, and The Jewish Homeland, west of the Jordan River. In the 1948 Arab-Israeli War, Jordan occupied The West Bank, annexing it in 1950 (interestingly a move that was condemned by the Arab League), and Egypt occupied The Gaza Strip. Leading up to the war wealthy Arab Palestinians fled the Jewish Homeland. After Israel declared itself a state, almost 400,000 Arab Palestinians fled or were forced out. These refugees ended up in Gaza or the West Bank. Egypt purposely did not annex Gaza, leaving it a kind of non-entity.
In the 1967 Six Day War, Israel occupied a large amount of it's neighbors' territory. After the war Israel returned most of the land, but Gaza and the West Bank were not part of the returned land.
The argument that Israel is occupying "Palestinian land" is wrong. Gaza and the West Bank were originally part of the Jewish Mandate, which Israel took back in 1967.
I believe Israel would cease operations if Hamas stopped firing rockets into Israel.
http://en.wikipedia.org/wiki/British...gal_instrument)