Both Israelis and Palestinians prefer to live in separate communities.
Muslim calls to prayer annoy non-Muslims. Mosques tend to be large,and there is a lot of traffic on streets leading to them.
Orthodox Jews like to string up a wire around their areas so they can consider the entire neighborhood as "home", thereby lessening Shabbat restrictions. The Orthodox do not want anyone operating vehicles on Shabbos. Some will throw rocks at cars driven by Jews to break their windshields and teach them a lesson about how to keep the Shabbos holy.
Here in Florida, Jews expect to live in Jewish communities. Builders expect this as well. When they built the California Club in North Miami-Dade County, each apartment was built with two kitchens a Mezuza screwed to the doorjamb. Gentiles do not have Mezuzas, and will not pay extra for two kitchens.
Surprise! Jews who immigrate to Israel prefer to live amidst other Jews. That is why the immigrate, probably a major reason for many or maybe most.
The main reason for walling off the Palestinians is supposed to be a security thing, but Israeli Jews mostly prefer to have Jewish neighbors. Palestinians prefer to have Palestinian neighbors. These people are not Americans. Israeli Jews do not think like Americans, as a rule. American Jews who prefer the US do not immigrate to Israel.
Lots of Israeli Jews get fed up with Israel and come here. I think we have more Israeli Jews coming here than American Jews going there.