The people not treated the same are people that live in the occupied territories. The status of those territories has not been settled since 1967. I.e. the West Bank and Gaza. Israel accepts that those are occupied territories (it has not annexed them). The parties they were taken from (Jordan and Egypt) do not wish to take them back. So "Israel" proper does not discriminate against Arabs (broadly speaking) but the status of the occupied territories, that are under military rule, according to international law, is different.
EDIT: https://en.wikipedia.org/wiki/Arab_citizens_of_Israel#Politi...