I think it is partly deterrence, but as has already been mentioned a lot of these hostages have already been killed and Israel in general has a policy where they are willing to 'write them off' if necessary. In particular they will aim to retrieve them to avoid there being hostages and intel loss even if this means the hostages dying. That would perhaps lessen how hesitant or reluctant they are to engage in large-scale bombing and aggressive ground operations.

The Israeli interest has always been in a slow-motion ethnic cleansing of Palestinians, rather than a sudden expulsion (e.g. repeating or going beyond the Nakhba). The latter would trigger to catastrophic an internal political crisis through uprising and geopolitical conflict. They are not stupid. I honestly think that either they messed up their intelligence or they underestimated how effective an attack they knew was coming would be, thinking it would further support their narrative of Israel needing to be defended from terrorism, which in practice in the West it has, though the actual immediate and local practical consequences could force them to escalate to a point where their open warfare on Palestinians backfires. In that sense, while Israel's policy, like the US's, relies on having a enemy which they can easily use to demonize the cause of Palestinian Liberation in general, while always ofc bearing the risk of backfiring.

It's not a conspiracy angle. Blowback is a strategic component of USA strategy and likely part of Israel strategy as well.

There's 2 possibilities here:

1. Israel knew and let the blowback emerge for the purpose of justifying actions it has planned in response
2. Israel didn't know because Hamas' counter-intelligence is outperforming Israel intelligence

If the 1st hypothesis is true, then we will all watch in horror as the Hamas action enters a kettle and Israel executes a well thought out brutal counter.
If the 1st hypothesis is true, then we would not expect to see many conflicts play out simultaneously as managing volume of blowback is likely important to reducing the total number of fronts to manage.

However, if the 2nd hypothesis is true, then that means USA intelligence is also underperforming and that means 5 Eyes intelligence is also underperforming, because they all work together.
If that's true, then what we would expect to see are a number of failed gambits on the side of the West coupled with a number of successful gambits from anti-Western groups. Those gambits should not be met with clearly well-planned counters.

The evidence we have predominantly supports the 2nd hypothesis. Russia's invasion of Ukraine seems to have not been exactly what the USA expected. The USA attempted to open multiple fronts against Russia in the months following the invasion and none of them materialized.

Then we saw the coup in Niger. Now we see Palestine.

When we couple that with the amount of spy hunting China has been doing successfully. It feels like there's been a sea change in the international intelligence power balance.