A: It all goes way back before 1948. Both populations have historical and religious ties to the land and a very strong attachment to it..

In Genesis 15:18 God promises Abraham that we he would give all the land from "the River of Egypt" to "the River Euphrates" to Abraham's descendants. Modern Israel actually occupies only a fraction of that land. This is the "Promised Land" the Children of Israel went to occupy, and the land where David and Solomon and their successors reigned for centuries. Jerusalem was their capital, and the Solomon's Temple was built there in the 10th century BC on land acquired by his father King David specifically for that purpose. According to the Bible this was the only place the temple could be built. The Babylonians destroyed that temple around 586 BC, and deported the people. They were able to return and rebuild it 70 years later, although on a relatively modest scale. Around the close of the first century BC, Herod the Great greatly enlarged the Temple, which is often called by his name. Within a generation of its completion, in 70 AD., the Romans destroyed the Temple and expelled the Jewish people from their capital.

The surrounding province had been called Judea, after the patriarch and tribe of Judah, from which Judaism gets its name. After the expulsion of the Jews, the Romans renamed Jerusalem as Aelia Capitolina, and the province Palestina, apparently after the long-defunct Philistines who had once lived along the coast. The name of the city eventually reverted to Jerusalem, but the provincial name remained until modern times. The Jewish people were scattered across the earth, but retained memory of "Eretz Israel" (the land of Israel) and the intent to return. The Bible also declares that even if the people are expelled from the land, they will always eventually return. (Deuteronomy 30:4) The Jewish Passover Seder traditionally ends with the refrain "Next Year in Jerusalem," as a reminder of this destiny.

The land was in Roman and Byzantine hands for the next several centuries until the time of Muhammad and the founding of Islam. During this pre-Islamic period many Arabs must have come in from the desert and taken residence along the eastern Mediterranean in what is now Israel and Lebanon. Until that time the Arab tribes were polytheistic idol worshippers, though many did become Christians. With Muhammad a new Arab religion was born. Muhammad claimed that God had become disappointed with the Jewish people and so sent the prophet Isa (Jesus). His followers were the Christians, but they went wrong too, so God came to Muhammad. Muhammad won many converts among the Arabs, and believed it was their duty to God to claim the world for Islam, by the sword if need be. This included Jerusalem and the surrounding area, which the Muslims took in 637 AD.

The Qur'an does not mention Jerusalem specifically, but Muslim tradition holds that the site of Muhammad's ascension into Heaven is there. The Dome of the Rock is intended to mark the spot, which is also the site of the Temples of Solomon and Herod. Muslims maintain that is the third holiest place in Islam, after Mecca and Medina. It is Judaism's most holy place, yet it remains under Muslim control.

Once seized by the Muslims, the Land remained under Muslim control for most of the next 13 centuries, with relatively brief interludes of re-conquest by the Christian West. Regaining the holy City of Jerusalem was one of the principle objectives of the Crusades, but it is a disgrace in Islam for any territory to revert to "infidels," so they fight very hard to regain anything lost.

The Ottoman Empire of the Turks ruled the area for centuries, until it was carved up in the aftermath of World War I. At that time the region called "Palestine" was made a British protectorate. There were already Jews and Arabs living in the region at that time. Recognizing the need for a Jewish homeland, the British promised to establish such a place in Palestine. Over the next few decades millions of Jewish refugees from Europe, Africa and neighboring Arab territories flocked to the ancestral homeland under British rule. The number of refugees greatly increased after World War II, when the number of displaced Jews was higher than ever, and the need for a Jewish homeland never more evident. By this time, however, Britain had already given up a large portion of its mandate to the Arabs. The area called "Trans-Jordan," i.e., the area "across the Jordan" river, was given up to become the Arab Hashemite Kingdom of Jordan. Only the narrow strip between the river and the Mediterranean remained for any Jewish Homeland. Still trying not to offend the Arabs, they partitioned this narrow strip even further into intertwined Jewish and Arab areas, and then withdrew from the area to let the Jews and the Arabs fight it out for themselves. The Arabs, backed by Jordan and other Arab states, attacked immediately, vowing to drive the Jews into the sea. The Jews fought back and managed to add a small amount of territory to what the partition had already given them, as was needed for self-defense. The State of Israel was declared.

Ironically, Palestinian nationalism seems to be a by-product of Zionism. There has never been a sovereign Arab state in "Palestine." During the entire Muslim era, it was always merely a part of larger state, ruled from afar. There was no Arab national identity as "Palestinian" until after 1948. Before that time the name meant simply any resident of the Mandate of Palestine, whether Jew or Arab or anything else. Even after 1948, Jordan quickly annexed the adjacent Arab areas on the "West Bank" of the Jordan River, and those "Palestinians" were considered citizens of Jordan, and their land a part of Jordan. As Israel successfully occupied these territories over the course of several wars, Jordan eventually backed off, leaving the Arabs in those territories feeling oppressed and defenseless. Frankly, I can't blame them for feeling resentful, but neither can I blame the Israelis for doing what they have to do to stay alive in a hostile environment. One could argue that in the formation of Jordan, the Arab state of Palestine has already been formed, and that any West Bank Arab not content to live in the Jewish state should emigrate there. Many have in fact, but my impression is that they tend to consider themselves refugees rather than immigrants, and have every intention of returning to their former lands.
It is a very difficult situation, unlikely to be truly resolved until Messiah comes.