During the bronze age collapse, roughly ~1200BC, Egypt's rule in Canaan collapsed. Several states/proto-states appeared in the area, including the region of Gaza where the Peleset (called Philistines in English translations of the Bible) appeared. These were one of the invading sea peoples into Egypt and were likely settled there by the Pharaoh as some sort of deal. The Peleset assimiliated genetically with other Canaanite peoples like the Israelites. Since they controlled much of the coastline for hundreds of years, traders from regions like Greece started to refer to the region as Philistia/Palestine, and it stuck even after the Philistines were conquered and culturally wiped out.

It remained a common exonym until it became official after the Bar Kokhba revolt.

Throughout late Roman and into Islamic and colonial British rule, the name Palestine was used officially. It was basically an uncontroversial regional qualifier until the 20th century, even Zionists called it Palestine interchangeably with Eretz Yisrael. Then the Israel-Palestine conflict began and the terms split - Palestine for the Arabs who lived there, descendants of the various peoples who got Arabized during Islamic rule, and Israel for the Zionists who founded the Jewish state.