Majority is secular. Of the religious people the majority are relatively tame. There are some extremist religious people e.g. Hasidim but they are a cult of their own (think Amish). They probably wouldn't even take part in a survey.
The reason for happiness is multi-fold:
* It's a 3 year average. Notice that Israel is actually slipping due to last year.
* Economy was generally good until last October
* Army service tends to unify the community
* It's a small country which tends to bring people together through collective fate
I'm not saying that the religious people aren't happier than the median. But I am saying that based on statistics Israel is relatively secular. More so than most western countries.