An overwhelming number of Arabs who lost their Israeli homes in 1948 left them at the urging of neighbouring Arab gubmnts who essentially told them, "Leave now. We will drive the Jews into the sea, and then you can return."
[Yes, I know the Jews committed some atrocities during that war and drove some Arabs from their homes. ]
When the Arabs lost that war, the mostly-self-displaced Arabs were not accepted and assimilated into the Arab countries around Israel but were instead forced into refugee camps. From Wikipaedia,
During the 1948 Palestine War, an estimated 700,000 Palestinians fled or were expelled... These refugees and their descendants number several million people today, divided between Jordan (2 million),Lebanon (427,057), Syria (477,700), the West Bank (788,108) and the Gaza Strip (1.1 million),... The displacement, dispossession and dispersal of the Palestinian people is known to them as an-Nakba, meaning "catastrophe" or "disaster”.
Prior to its adoption by the Palestinian nationalist movement, the "Year of the Catastrophe" among Arabs referred to 1920, when European colonial powers partitioned the Ottoman Empire into a series of separate states along lines of their own choosing. The term was first used to reference the events of 1948 in the summer of that same year by the Syrian writer Constantine Zureiq...
Following the war of 1948, hundreds of thousands of Jews were expelled, property-less, from many Arab countries. From this source,
Hundreds of thousands of Palestinians - with estimates ranging from 400,000 to 750,000 - left Israeli-controlled territory in 1948 and 1949, and they, along with their millions of descendants, make up one of the prickliest issues to be dealt with by Israeli and Palestinian negotiators as part of any resolution to the conflict. Haddad said that the key to resolving the issue rested with the Arab League, which in the 1950s passed a resolution stating that no Arab government would grant citizenship to Palestinian refugees, keeping them in limbo for over half a century. At the same time, the Arab League urged Arab governments to facilitate the exit of Jews from Arab countries, a resolution which was carried out with a series of punitive measures and discriminatory decrees making it untenable for the Jews to stay in the countries. "No Jews from Arab countries would give up their property and home and come to Israel out of Zionism," Haddad said.
And from earlier in that article,
About 850,000 Jews fled Arab countries after Israel's founding in 1948, leaving behind assets valued today at more than $300 billion, said Heskel M. Haddad. He added that the New York-based organization has decades-old property deeds of Jews from Arab countries on a total area of 100,000 sq.km. - which is five times the size of the State of Israel. ... In an interview, he said that it was imperative for Israel to bring up the issue of the Jews who fled Arab countries at any future peace talks - including those scheduled to take place in Annapolis in the coming weeks - since no Palestinian leader would sign a peace treaty without resolving the issue of Palestinian refugees.