The big problem is that while there used to be a relatively clean line aggressive (and highly illegal) Isreali settlers and those who organize them have purposefully worked to destroy any clear separation in an effort to make a two state solution impossible.

The isreali government has had many different forms and drives since founding - this is by far the worst form where displacement and genocide is openly embraced - but even under prior more tolerant government there’s always been a militant genocidal faction of the population that have indepently worked to establish illegal settlements.

The question of where to draw the line has been purposefully made as difficult as possible by people who are opposed to a line ever being drawn.