Stateless peoples tend to end up in unpleasant situations. Think about the Rohingya, the Tutsis in Rwanda, the Kurds, the Azerbaijanis, the Uyghurs, and (notably) the Jews prior to the establishment of Israel. Stateless peoples are often tolerated by host states, but when political or economic stressors affect the host state, it can turn on stateless peoples as scapegoats or as easy targets of hate or oppression.
Almost every state in the Middle-East is going to wonder why they should be asked to host large numbers of Palestinians — Palestinians who will occupy land, consume resources, and (in the short term, at least) need state support and assistance — when the land these Palestinians used to own was taken and reincorporated as Israel. No Western or Eastern country seems willing to take in Palestinians en masse, for similar reasons. Palestinians face the choice of a full diaspora — in which they lose their identity as a people to become mere refugees or emigres — or to be taken in as a stateless people that will always be treated as separate and inferior by whichever host state takes them in. A separate Palestinian state is the only path out of those conditions.