The history of that region is a story of the fall of European colonialism. It's not as though Palestine was a contiguous and autonomous state. I don't think that's ever been true. The Ottomans had it before World War I. World War effectively ended the Ottoman Empire, and the end of the war definitely resulted in the British taking over the Ottoman territory. At the time there was already a significant demographic change under way, but, yes, the Brits encouraged Jewish settlement in the area. The population increased dramatically from the end of WWI to the end of WWII--with a bigger increase in Jewish people than non-Jewish people (mostly Arabs), but both numbers increased substantially. Many people argue that most of the powerful Arab countries were disinterested in Palestine--not that it necessarily would have mattered--it had belonged to the Ottomans, then the Brits, and Egypt, for example, wasn't going to do anything about that. Post WWII, colonialism not being quite dead yet (cue your Monty Python voice), the British decided--with the help of the new United Nations, essentially the victors of WWII--that after the Holocaust, providing a state to the Jewish people already in Palestine was the right thing to do. Right, wrong, or indifferent, the creation of nation states was kind of a thing between the 1840s and the 1940s, as European empires crumbled and were replaced by nation states. It also reflected a reality that by 1948, the Jewish and Arab populations there were roughly equivalent in size--and, again--none of the neighboring Arab states seemed especially intent on claiming (or fighting for) Palestine--at least not against the British. Again, I think many people argue that those neighbors were perfectly happy to cede or sell that land.
And much like native American land that is now the cite of major American cities, it's not ever going to get unwound for the benefit of the ancestors of its inhabitants hundreds of years ago. That's just not how history works.