Israel was Jewish prior to 300BC, and Ottoman Muslim from 1516-1917.
The Zionist movement arose in the late 19th century[2], driven by growing persecution in Europe, and boosted by the British declaring that Israel would become a home for the Jews. The Jewish population increased from 24k in 1882 to 174k in 1931, driven by migrants fleeing Ukranian Pogroms[4], and then increased to 717k by 1948 in the aftermath of the Holocaust.[3]
As the Jewish population increased, so did tensions with the Arab population. In 1948 war broke out between the Jewish population of Israel and seven surrounding Arab states. Israel won and 700k Arabs were expelled from Israel.
When ceasefire was declared in 1949, Egypt retained control of the Gaza Strip, and Jordanian forces remained in the West Bank. These areas became a source of instability, since the Arab populations remained, but Israel couldn't easily defend it's major population centers without controlling them.