If Arabs agreed to divide Palestine in 1948, the borders would be known and there would be no war.

But Arab drive for Jihad was stronger than their logic.  Arab states started the war, Israel defeated Jordan and Egypt and got the West Bank of Jordan (Judea and Samaria) and Gaza. 

Israel gave away Gaza and is ready to give some of Judea to the Second Palestinian Arab state (in addition to Jordan), but the borders are not set yet.