It's religious irredentism. Those settlers aren't moving into Palestinian territory because Israel is just too crowded. They're moving in because they believe they have a mandate from God to take over the land and drive out the "Canaanites." Not a few settlers are Hasidim who moved straight to the West Bank from New York.
The Israeli government tried out the idea of dismantling settlements when they withdrew from Gaza. They literally had to force the settlers out at gunpoint and physically subdue them. It was a political catastrophe -- and Gaza has always been Philistine/Palestinian territory dating from antiquity. If Israel ever tried to pull settlers out of the West Bank, they would have a civil war on their hands.
Let's face it, in retrospect, creating Israel was just a case of Westerners feeling guilty about the Holocaust and deciding to appropriate land that wasn't theirs to the Jewish people. Since in 2009 the notion that America and major European powers get to make all major decisions about the world is only starting to be questioned, clearly in 1948 the major powers hardly batted an eyelash at deciding the fate of tracts of Middle Eastern land. The problem now is that after 6 million Jews have moved to Israel, it would be another injustice simply to say, "Oops, never mind, that was a mistake, you're on your own," because the West is responsible for their being there. The attitude therefore has become, "Well, if they're there already, don't try to move them."
So the Jewish extremists once thought they could co-opt that stance from the West such that if they built a bunch of settlements in the West Bank before a peace agreement was reached, their allies would say, "Well, if they're there already, don't try to move them." Since the peace agreement has fallen apart, now they just don't care. They can move to the settlements, their government doesn't have the political will to stop them, and it is impossible to move them out without destroying the country in the process.
The biggest difference between the Jewish extremists and the Muslim extremists is that when the Jewish extremists get the IDF to demolish Palestinian houses with bulldozers and force the residents into the camps, that isn't considered terrorism.
As for Charles Krauthammer, there are two possibilites:
1) He knows this undercurrent makes Israel look very, very bad, and aims to obscure it with a series of red herrings.
2) He is one of the Jewish extremists.
P.S. Not a few of the pro-Israeli group among evangelical American Christians are fanatics who think that once Israel takes over all the land and kills off/drives out all the Arabs, they can rebuild the Jewish temple and set in motion a bunch of events culminating in the second coming of Jesus. Yeah, sure, as many of 20% of the Palestinians who have been driven out since 1948 are themselves Christians, but of course the brown ones don't really matter, and besides, they're probably Catholic or Orthodox or one of those other works-based heretical cults. (Right, Crookshanks?)

