There will be a spate of deep dive pieces over the next few days addressing what the conflict UN resolution 2334 is "really" about. Deep dive piece are often useful, but have limited utility in this case for two reasons. Firstly, since most people who read deep dive pieces already have opinions, they do little to inform or change people's views. Second, issue linkage in the Israeli-Palestinian conflict is one of the biggest practical obstacles to progress. Settlements, in other words, are never just be about settlements. For Palestinians they are about the systematic matrix of control that occupation imposes. For Israelis they are an obsession of an international community indifferent to whether the country lives or dies.
Rather than get mired in these issues, it makes more sense to look at the practical politics of the situation. In this regard, the debate over UNSC 2334 is really a dispute over the cost of international antagonism toward Israeli settlements.
1) The international community doesn't like settlements.
International dislike of settlements is a cost of building them. We may agree or disagree that this dislike is fair, proportional, or warranted, but it exists as a cost. Specifically, Israel pays in political capital - good will with other states, willingness to cooperate, and the ability to form durable alliances. Settlements aren't the only reason Israel lacks political capital proportional to its ability to be a good ally. Systemic bias and latent Antisemitism play a role too. However, despite the claims of Israel's far right, these factors can be differentiated from international antagonism over settlements.
2) In the past, the Obama administration has mitigated this cost for Israel by spending its own political capital.
When UN resolutions against settlements came to a vote, the Obama administration exercised a US veto every time except last week. A veto prevents the text of a resolution from being used as a basis for further action on settlements. It is also a signal to the international community that Israel enjoys the support of the global superpower.
The US pays in political capital for its support of settlements. First, it derives no direct benefit from them. In fact, settlements have been opposed by every US administration since they have existed. Second, America's Arab partners and allies deeply dislike US support for Israeli settlement building. Third, settlements create local political conflict that destabilize the region in ways unhelpful for US interests.
In the past, the US has been willing to pay the political cost of international antagonism even though it derives no direct benefit from settlements. This is because Israel has great value as a liberal democratic ally. It's also because Israel has borne costs in its support for US policy that go far beyond UN vetoes. In 1991, for example, Iraq fired 39 scud missiles at Israel. Israel didn't retaliate militarily because the US asked it to refrain from doing so.
3) Stalled progress and alienation caused the US to reconsider covering these costs at the UN.
For a variety of reasons, the Obama administration is frustrated with the lack of progress on settlements. It also resents the Netanyahu government, which it sees as having taken a consistently antagonistic stance towards many important US policies in the Middle East. After eight years, the administration decided that it would not cover the cost of international antagonism over settlement building. Thus, the administration abstained on the resolution.
Israel's reaction is based on the idea that since it is a strong ally, the US should cover the cost. It is also based on the view of many Israelis that the cost itself is unjust. The international community imposes costs on the basis that it deplores settlements, but in the eyes of Israel's government, this is illegitimate. Israel's government has also viewed President Obama with paranoia since before his election, and experiences this abstention as the betrayal it has been expecting.
The US reaction is based on what it sees as a consistent attempt to undermine its policies in the region and prevent any meaningful action in the Israeli-Palestinian conflict. The Obama administration came to see UN vetoes as perpetuating a cycle of settlement building that hurt US interests, rather than a costly but justified investment in a close ally.
Regardless of which side one agrees with, the US abstention has made clear that the international political costs of settlements are real, and one for which there must be a sustainable form of payment. Arguing that since the cost is unjust it isn't real is no longer a viable strategy. Antagonism over settlements may be unfair, disproportionate, or unjust, but it is real and must factor into the Israeli government's decision-making process.