The most obvious reason to build settlements is that it establishes that it's Israel's territory. The more people living there, the harder it is to move them. It also reduces the land available to Palestinians. It also cuts their territory into pieces, making it harder for them to organize.
The West Bank was part of Jordan from 1948-1967. During that time, all the Jews who lived there were kicked out. That's why it's "fair" for Jews to move back now. The name "West Bank" is itself a Palestinian invention. If you say "Should Jews live in the West Bank?", you might answer "no". If the question is "Should Jews live in Judea?", then it becomes harder to answer "no".
There's another reason why settlements are fair. The land was offered as a peace deal, and it was turned down. Why should Israel be forced to follow a peace offer that was turned down? The Palestinians turned down multiple peace deals for 100% of the West Bank and Gaza and instead fought for decades and lost. If you fight and lose, there's no reason to expect the peace deal you turned down 50 years ago will still be on the table.
If the Palestinians turned down a peace deal for Gaza and the West Bank, and instead keep fighting, then Israel has no reason to reserve the land for them.
The Palestinians will accept no peace deal other than "We get all of Israel and genocide the Jews currently living there." Given that, there's no reason for Israel to be generous.
That's also why Israel has to be hardasses when it comes to violent Muslims. Right now, the USA and Europe still think peace is possible. Europe is going to find out the hard way in the next decade or two when Muslims start a civil war and try to violently take over Europe.
Yeah, most of the buildings in Gaza were destroyed. If they didn't want their buildings destroyed, maybe they shouldn't have started a war? Also, most of those buildings were free gifts, paid via foreign aid. If someone gave you free buildings as a reward for war with Israel, they're probably willing to give you more free buildings now. I think Israel's plan is that Gaza is going to be living in tents. They can't be allowed to have pipes or concrete, because it'll just be used for rockets, tunnels, and terrorism.
I still say Israel made a huge mistake by not actually murdering everyone in Gaza. The moment the IDF leaves, they elect new terrorist leaders and start preparing for the next war with Israel. Israel needs a permanent presence in Gaza.
If Israel did genocide Gaza, the war would be over in a week or two and then the media would move on to something else. By trying to kill Hamas but spare everyone else, that forces the war to drag out for months, which is a steady drip feed of casualties and negative press for Israel.
It's also wrong to say "Most Palestinians are innocent." There were mobs cheering Hamas on Oct 7. Opinion polls show overwhelming support for Hamas, even among Muslims living in the USA or Europe.
Muslims are violent in every country. Muslims are currently fighting in India. How is that Israel's fault? There are Muslim no-go zones in Europe. How is that Israel's fault?
If a group won't accept a peaceful political solution, violence is the only answer.