Two different laws. One for Israeli and one for Palestinians
In Israel proper the laws are equal, plenty of Arabs live in Israel with the same rights as anyone else. In territories they occupy the laws are unfair, but I don't know of any democracy that gives people in occupied territories equal rights
They shutdown Al Jazeera
They shutdown a foreign media outlet specifically for the duration of a war. Undemocratic, but not beyond the scope of democracy.
People who humiliate Palestinian often do not get punished by law.
This is discrimination not by law but by the people that enforce it, unfortunately democracy can't effectively fix the biases of its citizens.
The reason they are a democracy is because they have elections that determine the ruling party in the legislature. In 2022 a right wing party got the most votes and successfully created a coalition government. If the government does unpopular things then they will lose votes in the next election and be removed, ideally this limits unpopular government policy.