"As far as I know, all Israelis live in Israel." You are incorrect, because some half a million of them insist on living inside Israeli-occupied territory. And since it is axiomatic that a state can not "occupy" its own territory then it is also axiomatic that these Israeli settlers are not living "in Israel" .
Army: Blast in Korean DMZ wounds two South Korean soldiers (Reuters)
from the article: Palestinians plan UN resolution calling for settlement evacuation