That’s hardly surprising
It would have been seen by terrorists as a reward for Oct 7 and encourage further attacks.
OTOH establishing a Palestinian state would have been a precursor to a 2SS which is a hopeful path towards peace.
Likud (and Hamas) are both against a 2SS therefore, as you say, this vote count is no surprise.
When Palestinians ain’t leaving and Israelis ain’t leaving there is no other realistic option (regardless of our political leaning and whether we think Jews have a right to statehood in that part of the world.).
Note that Knesset has 120 seats (not obvious from the article). (also, of course, a large fraction of people between the river and the sea don’t get to vote for any of its seats)