You can't be a successful politician in Palestine with a position of "lets make concessions to Israel so we can stop suffering." The only successful politicians for the past 60-odd years have been the ones promising to fight Israel and get the Palestinians their stuff back.
The problem is that Palestine as a state has no military, economic, cultural or geopolitical bargaining chips to get their stuff back.
That means every successful Palestinian politician is elected with a mandate to "get our stuff back" but without the means to do it. So they have two options: either make concessions to get some stuff back, or try to fight.
If they make concessions, they lose their grip on power to the groups saying "Those guys are giving away stuff to Israel! We'll get your stuff back!"
If they try to fight a conventional war they lose in a matter of weeks (evidently.) So their only option is to fight just enough that their constituents are convinced they're doing a good job, but not so much that Israel wipes them out. Hence, the 60-year history of terrorism and targeting civilians.
In conclusion:
Palestinians need to make concessions for peace so that they can accumulate the bargaining chips they need to get their stuff back from Israel. They are not doing that because the Palestinian people will not support any leaders that pursue that strategy; they believe violence is a viable means of getting their stuff back even though that has been factually incorrect for the past 60 years. It is possible that the geopolitical landscape may change in the future, and violence becomes a viable option, but wasting resources on fruitless wars does not help change it.
Therefore it is not true that both sides have very good reasons to do what they do.