“In the beginning, Hashem created the heavens and the earth” (Bereishis, 1;1).
The first Rashi in the torah explains that the torah began with the creation of the world to show the other nations that the land of Israel belongs to the jews (since Hashem created the world, everything belongs to Him, and He gave it to us). Rabbi Meir Simcha of Dvinsk comments that the torah mentions the land of Israel in every single parsha!
How great exactly is the land of Israel?
The Gemara (Kesubos, 111a) states that anyone who lives in the land of Israel dwells without sin. Additionally, the Gemara (Berachot, 36b) states that the land of Israel lacks nothing. Furthermore, the Gemara (Bava Basra, 158b) states that the air in Israel makes a person wise. In fact, the Gemara (Bava Basra 158b) relates that when Rabbi Zeira moved to Israel he changed some of his rulings because the air made his wiser. Moreover, Rabbi Eliyahu Dessler (Michtav Eliyahu, volume 3) writes that people who learn in Israel gain a lot more than people who learn elsewhere. Similarly, the Medresh (Bereishis Rabbah, 16;4) states “there is no torah like the torah of the land of Israel.” Even further, the Gemara (Taanit, 10a) relates that the land of Israel was created before the rest of the world. Perhaps most amazing, the Rambam (Hilchos Kiddush HaChodesh) states that if there were no jews living in the land of Israel then the torah would vanish! The Rambam also tells us (Bereishis, 26;5) that all 613 mitzvot are relevant primarily in the land of Israel and that we are commanded to perform mitzvot outside the land of Israel only so that we won’t forget how to perform them when we return. Lastly, the Sifrei (Re’eh, 28) and the Tosefta (Avodah Zarah, 5;2) state “the mitzvah of living in Israel is equal to all the other mitzvot.” (One should at least visit Israel…as anyone who walks 4 footsteps in Israel is guaranteed a share in the World to Come!--Kesubos, 111a)…
So…Should EVERYONE live in Israel? Where should one live?
The Mishna (Pirkei Avos, 6;9) gives us advice as to how we should decide where to live: "Rabbi Yossi the son of Kisma said: One time I was walking along the way and a certain man met me. He greeted me and I returned the greeting. He said to me: “Rabbi, where are you from?“ I responded: “I am from a large city of scholars and scribes.” He said to me: “Rabbi, would you be willing to dwell among us in our place, and I will give you hundreds of thousands of gold coins, precious stones and pearls?” I said to him: “Even if you would give me all the silver, gold, precious stones, and pearls in the world, I would not dwell anywhere other than a place of Torah.” etc.
Many commentators ask: Why did Rabbi Yosi refuse to move? Even if it wasn’t a religious place, he could have helped them repent!?! The answer is that Rabbi Yosi saw from the offer of a million gold coins that it was a place where money controls everyone. A “makom torah” (place of torah) is a place where torah is of supreme importance. We must all strive to live in a “ makom torah,“ as the Mishna (Pirkei Avos, 4;18) and Gemara (Shabbat 147b) tell us: “Rabbi Nehorai said, exile yourself to a place of Torah and do not say it will come after you or that your colleagues will preserve it for you. And do not rely on your own understanding.”
The Gemara (Kesubos, 111a) states: "Just as it is forbidden to leave Israel for other lands, it is also forbidden to leave Babylonia for other lands." Why? Rashi explains because Babylonia was a big makom torah. I think we could learn from here that if one is able to then they should live in Israel. If they are unable to, however, then they should at least live in a makom torah. Therefore, we see that one must simply live in a makom torah--not necessarily the land of Israel.
We should all, however, strive as much as we can to live in the land of Israel. The Gemara (Kesubos, 112a) tells us that when Rabbi Zeira was moving to Israel he crossed a strip of water on a narrow beam with a rope because he couldn’t find a boat. He had such a strong desire to live in Israel. Similarly, the Gemara tells us that Rabbi Aba would kiss rocks and Rabbi Chiya would roll in the dirt…just to show their love for Israel.
Summary: The torah began with the creation of the world to show the other nations that the land of Israel belongs to the jews. How great is the land of Israel? It lacks nothing (Berachot, 36b), it gives wisdom (Bava Basra, 158b), etc. (see above). The mitzvah of living in Israel is equal to all the other mitzvot (Sifrei, Re’eh: 28, Tosefta: Avodah Zarah, 5;2). So should everyone live in Israel? Yes, but if one is unable to they should at least live in a “makom torah” (place of torah), as we learn from Rabbi Yosi (Pirkei Avos, 6;9) who rejected a million coins to move from his city full of scholars and scribes. The reason he rejected the million coins is because a “makom torah” is a place where torah is of supreme importance and he saw from the offer that in that city it’s the money that counts. Similarly, we should all strive to live in a makom torah (preferably in the land of Israel) where torah is of ultimate importance.