Many Jews worry that the Arab demographic would eventually outnumber the Jewish one thus eventually ending the Jewish state. Ergo, a two state solution should deal with this issue. Population exchanges, i.e. forcable expulsion of any Arab Israeli citizens that identity as Palestinians from Israel in return for a Palestinian state, IMO that would bring a lot of stability. Neither side could then claim the other is persecuting their minority. A two-state solution without that would just be more of the same.
This is exactly what brought stability between Turkey and Greece. It’s not perfect. We still potentially might go to war but it’s a lot more stable than what proceeded it. In addition, unlike Turkey with Greece, Palestinians don’t present an existential threat to Israel as some hardliners falsely claim. As the rubble in Gaza shows they wouldn’t stand a chance against Israel’s military.
Ending this issue would not only win Israel diplomatic capital but would enable everyone to work together on deal with other two state solutions… like Kurds when it comes to Iran/Turkey both of which pose a far bigger potential threat to Israel than a micro Palestinian state.