The entire life of the Jewish people revolves around the question of our existence in Israel -- whether we are in a state of exile or a state of redemption. Even after the Giving of the Torah, the complete fulfillment of the commandments began only after entering the Land, conquering, and dividing it -- after the Jewish people settled in the Land. The purpose of giving the Torah at Mt Sinai -- the moment at which we became a people -- is the fulfillmenet of the Torah and the commandments in the Land.
Why is Land of Israel essential to Jewish people? In the writings of Rabbi Isaac of Homil zt"l it is explained in several places that the settlement of the Jewish people in their land and the establishment of their kingdom is, in the language of Kabbalah, 'raising the aspect of Rachel'. Rabbi Isaac explains that the raising of the aspect of Rachel means revealing and shaping the true Jewish nature. In exile we can fulfill commandments and even establish Jewish community, but it is all still part of 'the aspect of Leah' - the world of conscious thought. Outside of the Land, Judaism is an intellectual and thought-out exercise; only in Israel Judaism is revealed as the Jewish soul's natural impulse, and natural expression of Jewish nature in the fulfillment of the commandments comes to light.
from Rabbi Yitzchak Ginsburgh, The Jewish Nature: The Way to Natural Consciousness
רחל מבכה על בניה מאנה להתנחם כי איננו
ושבו בנים לגבולם