Israel and the Arab states have been at odds for decades. This is because they don’t see eye to eye on Israel’s occupation of former Palestinian land in the West Bank and the Gaza strip. The UN had proposed a two state solution and the Arab states are calling for a division of the land in a fair manner. Israel has over time annexed and built settlements in these areas.
Here is a proper background of what led to this standoff. https://currentkids.in/politics/president-trump-officially-recognises-jerusalem-israels-capital/
Got it! Why are we talking about this now? Well last week, Crown Prince Mohammed bin Zayed of Abu Dhabi, and one of the most important leaders of the UAE, struck a deal with Israel, in a meeting organised by US President Donald Trump to broker a deal between Israel and Palestine. Even though there was no deal struck between Israel and Palestine, the UAE and Israel started discussions and worked something out between them. The deal involved Israel maybe agreeing not to annex more land in the area, and the UAE opening up trade with Israel.
OK that’s confusing! Does this mean peace between Israel and Palestine? No it doesn’t, although Israel has kind of agreed not to annex more Palestinian land for now.
What does Israel get out of this? They get an ally in the region (they had stuck deals with Jordan and Egypt before, but are at odds with the rest of their neighbours). The current President Benjamin Netanyahu, who has not really won a lot of support in the last elections, gets some goodwill out of this. This also means trade with the UAE, and a further legitimisation of Israel. .
What does the UAE get out of this? A trade partner, and access to Israeli technology. Israel is a leader in technology and healthcare.
What does Palestine get out of this? Some kind of a halt on annexation for some time. Importantly though, it signals to the Palestinians that they need to get more creative with their deal making. They can’t afford to lose more allies.