Palestinian health officials said rescue workers had so far recovered 42 bodies of Palestinians killed in the Israeli incursion into eastern Khan Younis. Gaza's Civil Emergency Service said more searches were underway with 200 people still reported missing.
The Israeli military said its forces killed more than 150 Palestinian gunmen during the week-long raid, destroyed tunnels and seized weapons.
After the Israeli forces left, people streamed back to their homes on foot and with donkey carts carrying their belongings. Many found their houses damaged or destroyed.
Witnesses said army forces had bulldozed the main cemetery in Bani Suhaila, the town on the eastern outskirts of Khan Younis that was the main focus of the raid, as well as houses and roads nearby.
"I am coming back and I have faith in God. I don't know whether we will live or die, but it is all for the sake of the homeland," said Etimad Al-Masri, who had walked for at least five kilometers back to her home.
"Despite the suffering, we are patient and God's willing we will have victory."
Many residents said they had been displaced from their homes several times.
"We hope there will be a ceasefire and calm. We hope that they act on a ceasefire so that we can live in security and safety," said Walid Abu Nsaira, holding some of his belongings on his shoulder as he walked back home.
Ten months into the war, Israeli forces have largely completed their storming of nearly the entire Gaza Strip and have spent the past several weeks launching new assaults on areas where they had already claimed to have rooted out Hamas. Thousands of people have been ordered to evacuate their homes, most of them previously displaced several times already.
Efforts to negotiate a ceasefire through mediators, ongoing for months, are once again faltering. On Monday, Israel and Hamas traded blame over the lack of progress.
Hamas wants a ceasefire agreement to end the war in Gaza, while Israeli Prime Minister Benjamin Netanyahu says the conflict will stop only once Hamas is defeated. There are also disagreements over how a deal would be implemented.
The war began with an assault on southern Israel by Hamas-led fighters who killed 1,200 people, most of them civilians, and captured around 250 hostages, according to Israeli tallies.
Since then Israeli forces have killed more than 39,000 Palestinians in the Gaza Strip, according to health authorities there who do not distinguish between combatants and civilians but say more than half of the dead are women or children. Israel, which has lost around 330 soldiers in Gaza, says a third of the Palestinian fatalities are fighters.
