It is not a separate state. Israel controls the borders and the airspace of Palestine and Palestine is not allowed, at least by law, to raise its own army, navy, air force. Israel is thus sovereign over Palestine and the Palestinians are its subjects, which is why Israel is not a democracy, and why this conflict is a rebellion.
Considering the Oct 7 attack it seems pretty wise of Israel to have not allowed Hamas a more advanced military. It is the professed goal of their government to eliminate Israel.
