Israel has announced that it is going ahead with construction of just under 1200 new homes in occupied areas. Not a smart move, Israel. Here's why.
1. The vast majority of the world sees these settlements as violations of international law. OK, obviously Israel doesn't care, but there just may come a time when they'll want the positive feelings of the rest of the world.
2. Every new settlement makes a 2 state solution more difficult and too many more will make a 2 state solution impossible. Those Israeli settlers aren't going to want to leave their homes should Israel decide to give that land to a Palestinian state (really unlikely) and they certainly aren't going to want to or be welcome as citizens of a Palestinian state. You can't have a 2nd state that looks like Swiss cheese - filled with little holes of Israeli sovereign land. Every acre of settlement is an acre of ground that could have been a part of that 2nd state and for the above reasons never can. Every acre removed from consideration makes the 2nd state less tenable for the Palestinians.
3. The status quo is not tenable. Israel is essentially maintaining an apartheid system right now. There is no good end for that. It does not promote safety for the Israelis or justice for the Palestinians.
4. Moving the Palestinians to Jordan or some other Arab country obviously is not a tenable solution... it hasn't worked yet.
5. A single state destroys Israel. If they continue to maintain the current apartheid system, they continue to lose any moral authority and their national soul dies. If they allow the Palestinians to become full citizens, they maintain moral authority but lose their identity as a Jewish state as very quickly the Jewish citizens would become a minority. In either case, the ideals and visions that led to the founding of Israel disappear.
I don't see any easy way for Israel to turn back the clock and dismantle settlements already there... but they can stop pushing forward. If they do not, they make the possibility of peace less and less likely.