Actually being recognized as a state literally only requires all relevant states to acknowledge that they recognize you as a state. The reason for any state to do so is primarily political.

If this is a lesson on anything it's that Israel is massively failing at international politics and that many countries that were formerly supportive or neutral towards it no longer think it's politically beneficial to commit to them in this conflict. I haven't seen any country so willingly burn its international relations for a military operation since Russia's invasion of Ukraine (but Russia was internationally on shaky grounds at that point to begin with) and the US's invasions of Iraq and Afghanistan - with the difference being that the US at the time had enough political weight to pull its allies along despite widespread protests and that it controlled the media narrative through embedded journalists because social media and Internet access wasn't where it is today - and of course those wars had far more identifiable targets and were primarily aiming for regime change.

Also, everyone negotiates with terrorists. Especially when they hold hostages. You just don't make a big show of it but it's the safest way to rescue most of your hostages compared to just dropping bombs on them. Israel has negotiated with Hamas many times in the past and exchanged Palestinian prisoners (including Hamas members) for Israeli hostages. It's very obvious that Hamas was hoping for this kind of exchange after Oct 7. At this point the only reason for Hamas to keep any of the surviving hostages alive is the hope of being able to use them for negotiation. If Hamas had no interest in releasing the hostages they would have executed them by now. The entire point of hostages is to exchange them.

Of course you could also argue that hostages can serve as a human shield to deter a direct confrontation that might result in them being harmed or killed but at this point (if not before Oct 7) it is obvious that this strategy does not work against Israel as Israel's policy is to shift the entire moral burden of the resulting deaths on the hostage takers, which might also explain why the continuing escalation in Gaza is becoming an optics nightmare for other countries given how the same attitude is usually perceived when countries like Russia demonstrate it. Remember a few years ago when Russian special police rushed a large venue full of hostages, wounding and killing many of them in the process of eliminating the terrorists. Heck, even the mere perception of this attitude was what resulted in the pseudoscientific "Stockholm syndrome" to explain why a hostage distrusted the police which they believed had no interest in adequately protecting them more than their captors who at least had a good reason to keep them alive and unharmed.

Also as the war drags on, pro-Israeli reactions to anti-war or pro-Palestinian sentiments have gone increasingly mask-off against progressives and queer people, completely abandoning the notion of Israel being a liberal and progressive haven in the Middle East to the point where the only differentiator is "yeah but at least we don't actively murder your kind". This shouldn't be surprising given that Israel's government has been definitionally far-right conservative for a long time and opinion polls reflect low acceptance of queer people but it hurts the narrative that has been overexaggerating Israel's liberalism relative to its Islamist neighbors (especially when the popular opinions in countries like Iran have been heading the opposite direction despite the attempts of its hardline theocratic government to shut that down).

Israel's weight in international politics has always been conditional at best and with the US having pulled out of Iraq and Afghanistan, other Arab countries having opened up to Western political interests and Iran having demonstrated caution rather than the frenzy its past rhetoric had suggested, the geopolitical role of Israel is no longer as important for its former contributors. I think Israel overplayed its hand this time similar to - but of course in a much different scale than - what Russia did with the ground invasion of Ukraine. Israel can not control the optics of its operation and as it stands the optics are very bad and Israel's strategy to control the narrative isn't working.