likud (netanyahu's party) won the most seats by a large margin, but neither bloc is anywhere close to a majority. there is something illegitimate about a minority party that lost the election taking power. but somebody needs to get 10-12 more seats. somebody needs to blink.
neither block is left or even centrist. they're both very conservative blocks, and it's more a question of personality than politics. for that reason, the most correct outcome is for netanyahu to stay in power, because he still won the election, and there's no mandate to reverse that. somebody in the opposing block - probably lieberman's party - is going to have to flip.
essentially, what happened is that netanyahu threw lieberman out of the coalition for being an ass (opposing a ceasefire) and now he can't get back to a majority without him, but neither can the opposition. netanyahu and lieberman are going to have to work their shit out.