What's with Palestine?

Who exactly are these people? I used to be on a forum with a young palestinian who lived in Kuwait. He told us that Palestinians are treated like dirt in Kuwait, and from what I've read since, the same holds true throughout that part of the world.
Now I always thought that palestinians were those of Arab descent who lived in what is now Israel when that area was ruled by the Turks. But my history lessons told me that when the Jewish people were given the mandate to form the government for that area everyone living there at the time was allowed to vote. In addition, I know there are Muslims of arab descent living in Israel to this day. I recall a news story a while ago of a resturant that had been co-owned by a Jewish and a Muslim family since 1948. It was blown up. So these people are quite able to live in Israel, and vote, and bring about changes democratically. And they are despised by the other people groups in the area. Why not simply live in Israel, as so many other gentiles do, and participate in the political process?
I'd also love to hear from any Muslims who don't believe Jews and Christians should be totally subjugated.