This post has arisen from his discussions with 
I wanted to respond in a post as it was getting too long for comments.
I want to debunk this idea, which is commonly held by many people, including many Israelis themselves.
1. Concentration of Forces
Firstly, as a matter of military theory and practice, concentration of forces is key to success in warfare.
Bringing all the Jews together in a relatively small area makes us stronger not weaker.
Indeed Israel contains by far the largest concentration of military force ever to have existed on the face of the earth!
Even if every other country on earth was to try to invade Israel they would struggle to match, let alone exceed by 3:1 (as required by military theory for an attack on a well defended position) the concentration of forces that Israel has, without leaving every other border they have undefended.
Even in largest battles of WWII, such as the Battle of Kursk, neither side deployed as many men, tanks and planes as Israel can deploy on 24-48 hours notice and these battles were over a much larger area than that of Israel.
In 1918 General Allenby deployed his forces on the plains of Sharon (5 minutes walk from my apartment) to finally destroy the Ottoman Empire.
It was one of the densest concentrations of force in history, comprising the largest mounted formation ever assembled, the Desert Mounted Corps (led by an Australian), supported by a Corps of infantry over a 16km front.
Yet there were only 35,000 men and 9000 cavalry!
Israel can deploy 750,000 men (and women), 3500 tanks and over 10,000 armoured vehicles.
2. A nation of preppers
Secondly, contrary to popular conception, Israel is the ONLY country that could survive a nuclear war.
A. Five Layer Missile Defence System
We have a fully operational 5 layer missile defence system that can take out 99% of all the nukes or other missiles heading towards us.
These 5 layers are:
a) Arrow III, with exo-atmospheric intercept against ICBMs;
b) Arrow II, with high in-atmosphere intercept of ICBMs;
c) Patriot PAC 3;
d) David's Sling, with unique interceptor against medium range ballistic and cruise missile; and
e) Iron Dome against short and medium range ballistic missiles, rockets and mortars.
This multiplier effect means that our own nuclear forces are equal to that of the US & Russia (both close allies), and vastly exceeds that of any conceivable enemy.
No nuclear power other than the US or Russia has sufficient nuclear missiles to penetrate our missile shield in sufficient numbers to destroy the country. We have enough to wipe out any conceivable enemy.
B. Nuke proof buildings and safe rooms
Even if a few nukes get through, over 60% of our housing stock is built to withstand the physical forces involved in earthquakes and nuclear explosions (same large lateral forces) and contains reinforced safe rooms designed and proven to ensure the occupants survive a direct hit by a conventional battlefield rocket or missile.
These same characteristics will allow both the building and safe room occupants to survive very close (100m) to a Nagasaki size (21 kiloton) nuke and within 300-500m of a megaton size thermonuclear warhead (blast force drops with the square of distance).
I live about 1000m from the center of Israeli military headquarters in Tel Aviv, so I have researched this issue thoroughly. :-) !
Check out the photos below of my safe room (MAMAD). These have been standard in every new apartment for the last 28 years!
Take close note of:
a) the full Nuclear Biological Chemical (NBC) positive pressure air filtration system;
b) the special window with complete seal and 16mm steel plate shutter;
c) the reinforced door with seal;
d) how column of MAMADs (and the window) is inset inside the building envelope to protect from blast effect and make a direct hit almost impossible to anyone other than a Jedi ("use the force Luke"),
In a sense, all Israelis are preppers, even if they don't know it. Earthquake proof buildings can survive very close to a nuclear explosion. The nukes on Japan in WWII prove.
C. Early warning
Israel also has a very sophisticated early warning system to ensure its citizens get inside those safe rooms in time.
The same layers of advanced radars that guide the missile defence systems also feed into the early warning system of precise location based SMS messages and localized sirens.
This means that only the people who are directly threatened by the missile need to disrupt thier lives and the rest of the country can keep about its business.
D. Civil Defence
Finally, Israel has by far the best civil defence system and forces in the world. They are constantly showing their superiority in disaster zones around the world (eg Haiti) and at home in terrorist attacks.