Terrorists will terrorize, especially when they feel justified by their homes being stolen from them by foreigners and inept leaders as happened with the formation of Israel. They should be caught, punished, even killed, since what they are doing is destructive and morally wrong.
However, if you actually want peaceful coexistence in the long term, the only possible solution is to stop oppressing these people, and instead to build a better world for them. The Israelis won: they built their country, they got international recognition, they defended it from their neighbors. However justified this may have been given the horrors of the Holocaust, it is also undeniable that this was to a large extent to the detriment of many people who previously lived there. They now need to ensure those people can be content with the life that is left for them.
But the reality is that Israeli leaders (and a significant minority of the population) do not want that. They don't view the Palestinians as full human beings (as many in the Knesset have compared them time and time again to cockroaches and other pests), and they believe Israel has a right to even those small territories left to the Palestinians. They are continually illegally annexing more land in the West Bank, and some are preparing to do so in Gaza as well.
Netanyahu has been very open about funding, or at least supporting, Hamas as a means to ensure that moderate Palestinians don't get a voice and a two-state solution is never allowed to happen. He has said these things openly. Of course, a one state solution is also unacceptable, as it would threaten the Jewish character of Israel to have such a signficant (and growing) Muslim Arab population. Making them officially second-class citizens is also unacceptable as it would deny Israel's claims of being a democracy. Killing them all would be a bad look internationally.
So, what was happening before October 7th was in fact the ideal state according to Netanyahu and his ilk: the Palestinians are de facto second class Israeli citizens with almost no rights, they act as a convenient boogie man to scare the populace, and they are weak enough to be no more than a nuisance. October 7th was an embarrassment to the authorities on many levels (and of course a horrific crime), so they have to punish the cockroaches of Gaza to ensure they don't have the courage to try another October 7th anytime soon, and to prove their strength to their own population, then return to the status quo. Of course, if Hamas is destroyed, they will also have to find a new militant anti-Israeli organization to lead Gaza, lest they end up with credible peace attempts that could make their position difficult.
