Despite this varied ethnic makeup Israel's basic law says that

> The right to exercise national self-determination in the State of Israel is unique to the Jewish people.

Which is why there are plenty of racist laws like this

https://en.wikipedia.org/wiki/Judaization_of_the_Galilee

Cultural Arabs and Ethnic Arabs are not the same thing.

Ethnic Arabs are from the Arabian peninsula. Islam's expansion started a slow process of Arabization whereby indigenous people in lands that ended up under the control of the Muslim caliphate/empire started speaking Arabic (mixed with their local dialects) and adopting aspects of Arabic culture, not dissimilar to the previous process of Romanization and Hellenization from the Greeks and Romans.

TL;DR People who today call themselves Palestinians are biological descendants of ancient Jews and other peoples local to the region of Palestine who eventually converted to Christianity and/or Islam, some remained Jewish, started speaking Arabic, and never left the land.

That's what genetic studies and history converge on, and what the early zionist leaders including Ben-Gurion also happened to believe in (Ben-Gurion wrote a thesis on this subject), until it became inconvenient for Zionism to continue to do so.