Mideast 101: Who are Palestinian refugees?

About 1.2 million people live in the refugee camps in the West Bank, Gaza and countries that neighbor Israel

(CNN) -- They are crowded with 1.2 million people, along with schools, hospitals and mosques. They are also full of unrest, anger and desperation -- and according to Israeli authorities, terrorists.

Palestinian refugee camps have become a focal point of the Israeli-Palestinian crisis, and the deadliest battleground in the most recent conflict.

For the first time since the camps were created -- and some date back more than 50 years -- Israeli troops advanced into the camps this year to destroy the "terrorist infrastructure," according to Israeli officials.

But who are the Palestinian refugees? And why are many of these "refugees" in makeshift cities inside the Palestinian territories?

RESOURCES Palestinian refugees and the right of return  Map: Refugee areas

The United Nations Relief and Works Agency defines "Palestinian refugees" as "persons (and their descendants) whose normal place of residence was Palestine between June 1946 and May 1948, who lost both their homes and means of livelihood as a result of the 1948 Arab-Israeli conflict."

While there were only 914,000 such refugees in 1950, the number grew to 3.9 million by 2001. The vast majority -- some 2.7 million people -- do not live in camps, but in Jordan, Syria and Lebanon.

The remainder live in 59 poor, crowded camps -- about half in Jordan, Syria and Lebanon and the rest in the West Bank and Gaza.

The United Nations runs the camps, but other nations foot the bill. Most of the $414 million for the camps last year came from European countries, $123 million (or 30 percent) from the United States, while Arab countries -- including Saudi Arabia and the Palestinian Authority -- paid a total of $7 million.

For its part, Israel has not budged on the refugee issue, either by taking responsibility for the camps or allowing refugees back into the area.

"Israel is not ready to allow or discuss the return of refugees into its boundaries, refugees who had to escape because of a war that was forced on Israel," Israeli Prime Minister Ariel Sharon said Monday. "That would mean ... the end of Israel as a Jewish state."