Of course, many people find that defining Israel as a "Jewish state" to be racist and exclusionary of its non-Jewish citizens. This makes me wonder, what does it mean for Israel to be a "Jewish and democratic state" and why is this definition important.
The idea is actually quite simple: Israel needs to be a homeland for the Jewish people, a state where Jews are a majority and a state to which Jews from any other country can return and make their home. This last point is perhaps the most critical given the history of Jewish mistreatment in the Diaspora. A Jewish homeland must be a place where Jews can return and be free of the harassment and antisemitism that they are subjected to in many other countries. Because Jews created a state that is a well functioning democracy, it is important that Jews be able to maintain a demographic majority to ensure that Israel is a state that can protect Jews around the world and represent Jewish interests in the international community. If the state does not retain a Jewish majority, then the state's policies will not create a society that is truly a refuge for Jews.
This does not mean that the state must forbid others from living there or deny them rights. Indeed, one need look no further than Israel's Baha'i population. The Baha'i moved their headquarters to Haifa because both Iran and Egypt practiced systematic discrimination against the Baha'i because they perceive the Baha'i to be heretics. From the State of Israel's founding in 1948, the Baha'i making pilgrimage to its holy sites in Haifa and Akko have been able to do so without enduring the harassment and threats that they faced in Iran and other countries. Israel has been historically tolerant of its Christian minorities while Christians living in Egypt and Lebanon have long endured persecution and threats for practicing their faith. Lastly, Israel is viewed as a haven of tolerance and opportunity by Africans escaping from countries like Sudan, where they are often persecuted by their Arab neighbors (like during the Darfur genocide).
And last, but certainly not least, is Israel's largest minority: its Arabs. Making up 20% of Israel's population, Israeli Arabs have representation in the Knesset and there is even an Arab justice on Israel's Supreme Court. Despite the fact that many in Israel's Arab community support Israel's enemies (several Arab MKs have been cooperated with Hizbullah and Hamas), Israeli Arabs have enjoyed political rights and freedoms that they do not get in any other Arab nation.
But all this aside, the central issue is not Israel's treatment of its non-Jewish population, the key issue is the importance of having a Jewish state. While Jews live in other nations, they cannot rely on other nations to protect their interests. For example, there are significant movements in many cities in the United States to ban circumcision for anyone under 18 years of age. Whatever the legal merits or demerits of such bans, it shows that a country like the United States will never prioritize the promotion or protection of Jewish culture or traditions. And for good reason, since the United States is not a Jewish state or even a Christian state and is not focused on preserving any ethnic or religious traditions. In many ways, this is what makes the United State great, but a people interested in preserving their culture and traditions in the long term need a homeland where those traditions are the essence of the culture. Jews survived in the ghettos and shtetls of Europe by frequently isolating themselves or being shunned by the rest of society. Jews should not have to choose between living in isolation or assimilating in order to survive as a distinct people.
Indeed, Israel is a focus of Jewish life even for those of us still in the Diaspora. We have a place we can visit and experience what it is like to live in a place where Jewish culture is predominant and we know we have a place we can go if our host country turns on us like so many have before.
We need a Jewish state for the same reason that the Armenians need Armenia, the Turks need Turkey and the Kirghiz need Kyrgystan. We are a people that barely survived 2000 years spread across the globe and we need a place to call our own where we can be amongst our kind if we choose to be. We should never choose to be an ethnically or religiously homogeneous state and Israel has so far been able to balance its Jewish identity while respecting the rights of its minorities.
The question is: will Israel's Arab neighbors ever be able to come to terms with Israel's existence as a homeland for the Jewish people, which necessarily requires a Jewish demographic majority and a promotion and respect for Jewish traditions? Israel's current government and its predecessor governments have recognized the right of Palestinians to have a state for themselves and ask only that the Palestinians recognize the same rights for the Jews. Of course, doing so means abandoning the "right of return," or as I prefer to call it "the right of Arabs to demographically destroy Israel as a Jewish state." Until the Arabs give up their dream of destroying Israel as a homeland for Jews, there can be no expectation of peace.