I don't fully understand the history of the conflict either but this is what I found on the net:

'The roots of the current conflict lie in the battle over land claimed by both Israel and the Palestinians.
In 1947, the United Nations recommended partitioning what was then the British mandate of Palestine into Arab and Jewish states. Jewish settlers declared the formation of the state of Israel in 1948, prompting the surrounding Arab nations to invade. By the end of the brief war, the land that was to have been the Palestinian Arab state was occupied partially by Israel and partially by Egypt and Jordan. Hundreds of thousands of Palestinians were expelled or fled Israeli-controlled territory and many wound up in refugee camps in the Egyptian-held Gaza Strip.
In 1967, Israel launched a pre-emptive strike on Egypt, Syria and Jordan and occupied the Gaza Strip, West Bank and East Jerusalem, among other areas. The Gaza Strip remained under Israeli control until 1994, when it became partly autonomous under the Palestinian National Authority as a result of the Oslo accords. Israel continued to exercise considerable control in the area, however, and Israeli settlements that had been built during the period of military occupation remained.
Successive peace processes started and stalled in the following years. Neither the Israelis nor the Palestinians lived up to commitments made under a timetable set forth in 2003 meant to lead to a Palestinian state next to Israel. Israel did eventually evacuate its settlements in the Gaza Strip, however, forcibly ejecting Israeli citizens from these settlements in 2005.
In June, an Egyptian-brokered cease-fire between Hamas and Israel halted missiles being fired into Israel and stopped Israeli incursions into Gaza. The truce lapsed on Dec. 19 and, following dozens of rocket attacks from Gaza, Israel launched its crackdown.'