I agree, a two state solution is the only solution if there ever will be peace but how do you get to it?
Israel must exist alongside a Palestinian state but how do you get to that with Hamas? Hamas does not believe that Israel should exist, Hamas's supporters in Iran and Hezbollah do not believe that Israel should exist. When I say exist, I don't mean the settlements, I mean their view is that literally Israel as a state should not exist at all.
I'll rephrase this another way. Had Israel not been a major military power then what do you think Hamas, Hezbollah and Iran would try to do to Israel? Israel would potentially be destroyed so that threat is clearly existential and without western support it would be potentially catastrophic.
Iran has been attempting to acquire nuclear weapons over the years precisely so that it can destroy or reduce Israel. It's just bollocks that all Israel needs to do is abolish the settlements and retreat, it's not that simple.