The gradual annexation/settlement of the west bank is a different story. I am opposed to that. But just like there are two sides to the story in Gaza there are two sides in the west bank. The west bank isn't a story of peaceful people that are being abused, it's a story of a violent struggle between two groups (well, more than two groups if we include the surrounding countries). The Israeli settlement activity is a side story in this conflict, not the root of it by any means. You're letting the Palestinian side off too easily here, when the peace process was in full swing they could have gotten complete control of most of the west bank and dismantlement of most of the settlements. What was their response? Suicide bombings. You are removing agency from the Palestinians when you say the distinction doesn't matter. They as a people made choices the led them to the current situation.
The Palestinians want to dismantle Israel by force. Israel is opposed to that. What we're seeing broadly is the meeting of those two objectives. I think it's wrong of Israel to build settlements in occupied territory of undecided status and it's not helping a possible future resolution but the reality on the ground would look pretty much the same if there were no settlements at all given the irreconcilable differences between the parties here.