Look up the "occupied territories" and across the internet you will hear the same story: The areas occupied by Israel in 1967 are not its territory and it is not allowed to house its citizens on those territories. But there is a problem in that statement: It assumes that the territories held by Israel before 1967 were not occupied. In 1948-1949, Israel conquered a large swathe of territory that the UN designated as a "Palestinian state" or in the case of Jerusalem, as an international zone. Until 1967, the Arab demands were for an Israeli withdrawal to the 1947 partition lines, after 1967 to the 1949 cease fire lines (the pre-1967 borders).
While the 1949 cease fire lines appear to be universally accepted, there is no guarantee that those boundaries are recognized and it is quite possible to argue that Jaffa or upper Nazareth are "illegal settlements".
My son was born in Jerusalem and has an American passport which states that he was born in Jerusalem but not in which country. The USA, like most other countries has taken care never to recognize Israeli rule in Jerusalem, although half of the city was Israeli before 1967. Effectively the USA is not only not recognizing the 1967 occupation: It is not recognizing the 1948 occupation either. Ironically Jerusalem is the one place in Israel which had a Jewish majority before the British occupation/mandate in 1917.
The main difference between 1949 and 1967 is that in 1967 the UN Security Council explicitly stated that Israel could not annex the territories, and Israel hasto some extent accepted that decision. In 1949 the Security Council admitted Israel as a member of the UN and said nothing about territorial borders, so the status of territories occupied in 1948 is hazy. The 1947 partition decision, that preceded the 1948-1949 war, was never executed: The Arabs refused to accept it and the UN never took steps to implement it, so it might be argued that it was a dead decision of no subsequent significance.
In 1948 Jordan and Egypt occupied the West Bank and Gaza while Syria occupied a small swathe of territory designated as Israeli. Perhaps because in 1967 Israel was the sole "occupier" there was no difficulty in passing a resolution whereas in 1948 it was more complex.
There is also an ambiguity: While Israel's occupation of the Golan and Sinai was an occupation of sovereign state territory, in Gaza, the West Bank and Jerusalem it was replacing a previous occupier.
The reason I raise this issue is that I believe Israel has a lot to gain from internationally recognized boundaries. Recent events have shown that peace treaties with Arab states are hardly precursors to a new international order, but at least the borders with Egypt and Jordan are stable and governed by peace treaties and while the "peace" is at times utterly minimalist, there is a lot to be said for having indisputable boundaries. The Palestinians clearly cannot guarantee the Israelis much in the way of peace but internationally recognized borders might be of value. Few modern states, if any, are so lacking in internationally recognized borders and there is a potential future threat should Israel withdraw from the West-Bank without a treaty.