It would not be entirely far-fetched to compare the status of Arab Israelis with the status of Coloureds in South Africa during late apartheid: Coloureds had some rights (including enfranchisement well before Blacks did), more than Blacks did, but were still pretty systematically discriminated against compared to Whites.

In Israel right now, Arab Israelis have fewer rights than Jewish Israelis do--notably in land rights, where pre-1967 land ownership claims are only legally recognized if you're Jewish, not Arab. That a coalition government has just now been formed with an Arab Israeli party for the first time in Israel's history, largely because it's the only way a coalition could be formed that doesn't include Netanyahu, doesn't invalidate the fact that legal discrimination still exists in Israel, let alone Israel's blatantly illegal actions vis-à-vis Palestine.

The real apartheid in Israel is not against its Arab population (although by various means a good part of it doesn't even have citizenship). The real apartheid is what happens in the occupied territories, where Jews enjoy all the benefits and protection of their citizenship while Arabs are deprived of any rights.