On one level the conflict between the Arabs and the Jews is a real tragedy. Two peoples, with equally good claims, lay claim to one land and are unable to find a compromise which allows them to share. The early Zionists recognized this: The Arabs, after centuries of domination, wanted to re-establish a united Islam under which they could live with pride and power. The Jews, after centuries of unpleasant habitation in other peoples countries culminating in a frightful Holocaust, wanted the same thing and felt the only place they could do so was in their ancient homeland.
Everything else follows from that. The conflict continues. The settlements are both defensive and offensive; needed as protection in future conflicts, desired as part of the homeland and to make it more viable.
As for how human beings justify these things, perhaps you are young and naive. Human beings can find endless justification for anything. Remember manifest destiny? The white man's burden? I only mention these things because I think you'll be familiar with them. Not because I think white men or Americans are evil. Dark peoples have plenty of the same. Just look what the Arabs are justifying.
There's an very definite reason for this. Israel has done much to try to appease the Muslim factions, including giving up land (almost unheard of for a victorious nation). The PLO, on the other hand, has rejected, denounced, violated, or failed to uphold virtually every term of every charter ever conceived, including Clinton's version which would have given Arafat 95% of everything he was asking for. The sad part is that most of the "concessions" that the Muslims are asked to make mostly center on not killing innocent people anymore... and they are unwilling and/or unable to comply.
In short, there can never a compromise, because the Muslims simply will accept nothing less than the expulsion or eradication of the Jewish peoples there. Given this fact (by everything fair, moral, justifiable, and civil), those lands are Israel's to occupy and administer as they see fit.