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The land that is Israel was bought by Jews from absentee Arab landowners starting in the late 1800s. Theodor Herzel was traveling around and persuading Jews of the need to regain their homeland. There used to be little boxes in American and European Jewish homes and synagoges where money was collected to held buy the land. In the 1800s early 1900s there weren't many arab residents, because there was nothing there. It was mostly pestilent swamp land. The Jews bought the land, drained the swamps, and started farming, that's when arab workers started moving to the area.If you read Mark Twains account of the Holyland in the 1800s (The Book is The Innocent's Abroad) he describes as a desolate waste land.
In 1848 the Mufti of Jerusalem told many of the Arab residents of Israel to leave. The plan was to attack Israel the day after it's official statehood which was May 14 1948. They didn't want fellow arabs to be in the way when the surrounding arab countries attacked. They expected an easy, quick victory and assured arab residents that they'd be back in their homes in no time plus they could have everything that the Jews left. Didn't quite pan out that way. And FWIW UN regulations keep arabs in the "camps" in squalor. They are not allowed to do alot of things such as build permanent houses. Some do, but it's against UNSCOM regs for displaced people camps.