I prefer to think of Israel as an ethnostate with some theocratic features - since Jews who are atheists by conviction enjoy right of return and the protection of the State, but cannot (for example) marry without approval of the religious authorities.
And of course it is not a "free democracy", how could it be? Allowing a situation to arise where non-Jews could outvote Jews would eliminate the entire purpose of teh State and would be criminally irresponsible.
This may be your preference but with the passage if the nation state law in 2018, this is no longer the reality.
A big change under this law is: “the right to exercise national self-determination” in Israel is “unique to the Jewish people.” --- Christian Israelis, Christian Arab Israelis, Muslim Arab Israelis, atheist/secular Israelis, and Druze are now a separate, lower class of citizen,
And ethnicity has nothing to do with this change. First class status in Israel is based upon one's religion and one religion, only: Judaism. Politically, tradition has prevented non-Jewish political parties from joining to form a government; this new law codifies that tradition. Now, by law, only Jewish Israelis have the right to determine what kind of state and society they live under
Benjamin Netanyahu called the passage of this law "a defining moment in the history of the state". He is right about this.
So I'd embrace Israel being a full-throated theocratic state now. The only other available option on the global stage is apartheid state.