“This is a big WTF of history. The most security conscious nation on the planet - or so I thought.”
Israel probably has almost as many traitors in positions of power as USA has.
The problem with idiot-proofing your defense is that it builds complacency and a better idiot.
The Israelis have famously penetrated high-level Iranian nuke security. But the Iranian regime is divided up into armed cells that act semi-independently after getting orders from the top. Penetration of the nuke group did not mean penetration of the revolutionary guards or whatever group(s) are arming Hamas. Their security probably got much better after the nuke fiasco and killing of Soleimani.
Iron Dome proved very effective against smaller attacks, so the Israelis got complacent and Hamas and the Iranians built up large stockpiles of bigger rockets. They also started using drones and came up with the paraglider idea. This is the "better idiot" part.
There are two huge failures here: i) the failure to detect that an attack was immanent; ii) how did Hamas acquire so many weapons in a controlled zone like Gaza? Are NGOs cooperating with weapons smuggling? Is another power like Turkey already involved?