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 Thanks for offering to answer questions.

I have studied this issue very little.  What I would like to know is:

a) What would the Israeli government like Palestinians to do?  (E.g., where does the government want them to go?)

and

b) If a Palestinian wanted to move from what I suppose are called the “occupied territories” (the Gaza strip and the West Bank) to the middle of Jerusalem – get an apartment, get a job, etc., and just live like an Israeli citizen – could he or she do that?  If not, and if Israel says that these areas are part of Israel, why can these people not move freely and have all the normal benefits of living in Israel? 
 @Cousin_Martha_Corey

Oof, Cousin, question (a) is a doozy, in part because it is of course very complicated and in part because it is very depressing. Let me return to that in a second. 

(b) There are four different possible situations that a Palestinian can be born into. 

Situations 1 and 2 are quite similar, so let me lump them together for purpose of your question - Palestinians born in Gaza or the West Bank cannot become Israeli citizens. At best, they *may* be able to get a work permit which does not allow them to sleep in Israel but allows them to enter between certain hours of the day for work only. These permits are highly coveted by the dispossessed population, there are not enough to go around, and their amount can be raised or lowered by Israel as a bargaining chip. 
One exception is that Gazans and Palestinians from the West Bank, if they marry an Israeli citizen, are *sometimes* able to receive residency, which entitles them to some but not all rights that citizens have. 

Situation 3: East Jerusalem. A Palestinian born in East Jerusalem is given a residency permit automatically, which allows them to travel and work within Israel. They are allowed to apply for citizenship, and in theory (and often right wing Israelis will falsely claim) it is supposed to be available to any East Jerusalemite. But it is actually a process that only some succeed at, as it is convoluted, expensive, and many are rejected. 
East Jerusalemites who apply for citizenship are also often harassed by fellow Palestinians for normalizing the occupation, so there is a social cost as well. However, my (incomplete) understanding is that this is becoming more acceptable in some sectors of East Jerusalem society. 
East Jerusalemites can in theory move into Israel proper, although in many cities and towns this is de facto impossible because of implicit and explicit racist policies against renting to Palestinians. 

Situation 4 are Palestinian citizens of Israel, who are, well, citizens, so they formally enjoy all rights that an Israeli Jew enjoys. (Of course they face discrimination, but in theory they are legally equal.) 
 Thank you for answering me with so much detail.  The answer to my second question was especially good;  I understand the situations for the Palestinians born in various areas now.

As for the first question, it’s funny, because the one person I have ever asked the question, “Well, where should they go, then?” to (before you) was an American Jewish woman who is a progressive Democrat, “anti-racist,” etc.  (She is someone I know IRL.)  She told me, somewhat tersely, that the Palestinians should go to Jordan.  She said the Jordanians had offered to have them.  She seemed too upset to explain further, so I dropped it. 
 @Cousin_Martha_Corey 
Yeah, I think that woman has a pretty bad take, and it is hard that many otherwise progressive people have a wrong-headed and harmful view about Israel/Palestine. 

To try to be charitable to her, I think these conversations are especially difficult to have outside of Israel without knowing and trusting the person. So often - in fact, on this very thread, though I've blocked all the relevant posts - people's expressions of solidarity for the Palestinians are just ways of signaling coded antisemitism. So I wonder if her guard was raised because she was worried you were antisemitic? I don't know though, that's a complete guess, I don't know how well you know this person. 

It is a real shame, and it makes this issue such a landmine. Israel is an apartheid state, but its also true that antisemitism exists, and Israeli institutions are interested in trying to conflate criticism of the former with the latter. We obviously shouldn't conflate them, but we also shouldn't pretend that antisemitism doesn't exist (not saying you were!!!). 
 I understand.  Worry about antisemitism is a good guess, and some of the replies in this thread are alarming, too say the least.

The woman I mentioned is someone I know pretty well, and I don’t think she thinks I am antisemitic.  I’m a liberal, too.  (Well, she’s “progressive,” and I’m “liberal,” but it’s close enough for this purpose.)  The worst thing about me, from her perspective, is probably that I’m an atheist, but she knows that’s not the same as being antisemitic.

I think maybe the reason she feels insecure is that being so pro-Israel is the one way she is out of step with U.S. (“woke”) progressives, a group that she very much wants to part of. 
 @Cousin_Martha_Corey 
Interesting. Yeah, your theory is a good one, I think. 
Anyway, I hope if it comes up again you are able to (delicately!) nudge her in the right direction. 
 Thanks!