In the West Bank they are former Jordanian citizens who had their citizenship revoked post 1967. Egypt never offered residents of Gaza citizenship, so I suppose they are former Ottoman Empire subjects without any new state to become citizens of. Remember that they rejected the creation of an Arab state in 1948 under UN Resolution 181, and Israel supported the creation of such a state.
Broadly, they are a stateless population that has made war on Israel since 1948 (and against Jews in the area since before then) and it is hard to see why it's Israel that owes them something, as opposed to their Egyptian and Jordanian allies who were in control of those territories and their lives for 20 years.
[1] https://en.wikipedia.org/wiki/Jordanian_annexation_of_the_We...