They are not citizens (Israel considers them stateless) but they are subject to Israeli law and rule at every turn. Nothing can go into or out of Gaza, not even food, not even collected rainwater, without Israeli permission.
The point is, it's as closed a political system as it gets. No matter what the polity does, their situation cannot change because they have no rights in the government that controls their lives (Israel)
Palestine is not a country according to Israel and they do not treat anyone living there as a citizen of a separate country.
No country in the world has total control of any other country's electricity, food rationing, water rationing, import / export, ability to work, ability to depart and arrive from the country.
You constantly mention Egypt as if it somehow makes all the facts I've stated false. But it does not. If they cooperate to create the same situation the situation does not change. There are still 2 million stateless people whose electricity, food, water, internet, and basically all access to the outside world is controlled by governments they are not citizens of.
The point is, it's as closed a political system as it gets. No matter what the polity does, their situation cannot change because they have no rights in the government that controls their lives (Israel)