There's been a lot of talk recently about the lines of 1967, most of it not helpful, and some of it vague. Politicians, journalists, pundits, bloggers and most everyone else much prefer generalities to particulars. Here's an attempt to be specific and grounded.
CIA World Factbook)
The original line was drawn in 1949 during the armistice talks between Israel and Jordan. They mostly reflected the reality of military positions at the end of the war of 1948, but with one major change. The Israelis, fearing that the extreme narrowness of their country would repeatedly entice their neighbors to attack it, demanded that a strip of land along the northwestern edge of the Jordanian-held West Bank be handed over to them, in return for an area to the west of Hebron. The area, known till this day in Israel as The Triangle, contained a series of Arab villages, from Um el-Fachem at its north-east down to Kfar Kassem at the south-west. The Americans demanded that Israel promise not to force any of the villagers out of their homes, and Israel agreed, and today there are hundreds of thousands of their descendents, Israeli citizens all, living in the area. A very detailed map of the region can be found here, put up by the University of Texas, but since it's so detailed it is a bit cumbersome to navigate. It's worth the effort, however.
At the time, in 1949, the line, along with the rest of Israel's borders, was explicitly and contractually defined as an armistice line, not as a border, since the Arab states were not willing to officially recognize Israel's existence, and perhaps they wished to have legal grounds for changing the lines later on. For all I know, Israel may have had the same thought. The importance of the matter, however, is that all sides agreed the line was not permanent.
This line is variously referred to as the Green Line, the 1949 line, and the 1967 line (meaning June 4th 1967).
At its narrowest point, the distance between Kalkilya on the West Bank and Israel's coast north of Kfar Shemaryahu is 8.54 miles, according to the ruler function of Google Earth. Israeli politicians of all stripes like to talk about Israel's narrow waist, even those among them who propose to relinquish control of most of the West Bank. On the other side, Palestinians and their myriad supporters demand that Maale Adumim, a very large settlement east of Jerusalem, must be dismantled, since it cuts the West Bank in two; the distance between the town of Maale Adumim and the Dead Sea is 9.69 miles if you use the definition of the Geneva Initiative folks, and 8.82 miles if you measure from the easternmost structure in the industrial area to the east of town. There is however a significant difference in that Israel has repeatedly indicated that there will be a north-south road under Palestinian control to the west of Maale Adumin, under or over the Jerusalem-Maale Adumim road, so that Palestinians will not need to go all the way around Maale Adumim when traveling from Ramallah to Bethlehem. Actually, quite a bit of its length is already paved.
My apologies in advance to all friends of Israel for the myth-busting I'm about to engage in, but honesty forces me to it: Nowadays there is no serious Israeli politician who suggests Israel annex the Palestinian town of Kalkilya and its tens of thousands of people; indeed, the security barrier, commonly accepted in Israel as an approximation of the line Israel is comfortable with moving back to, follows the Green Line here. This means that Israel essentially accepts it will return to that narrow waistline of 8.54 miles.
This is not to say the entire argument is farcical. It isn't. Israel has serious threats to worry about should it relinquish military control of the West Bank; but that particular, eye-catching slogan, so convenient for sound bites, isn't one of them.
The dangers of relinquishing military control of the West Bank are as follows:
An Arab army will attempt to sever Israel at its narrow waist along the coastal plain.
Palestinian forces - regular or irregular - will infiltrate along the line, and given the tiny distances they'll be able to reach Israel's main cities within minutes and wreak havoc.
Palestinians will be able to shoot directly at numerous targets in Israel's populous heartland.
Palestinians will be able to shoot mortars and short-range rockets at numerous targets in Israel's populous heartland.
Israel will lose its ability to collect human intelligence about terror cells in the West Bank.
Rather than controlling the West Bank, Israel will have to defend itself along a long and twisted border much of it in hilly terrain.
Israel will lose most of its control over the aquifer that supplies much of the water to the coastal wells.
The Palestinians will have the legal right to demand some of the water of the Jordan Basin.
These threats are of varying quality. The first, regarding an Arab army, can be fended off through two measures. First, the Palestinians will not be allowed to have a full-fledged army. If they ask the Europeans, this will be a blessing for them, since armies are extremely expensive things to have, but if they insist having an army is essential to sovereignty they should be reminded that Germany (both of it) was allowed only a limited military between 1945 and 1991, and got along quite well, and Japan's military was also limited post 1945. So no, having an army is not an essential prerequisite for sovereignty.
Second, Israel demands a military presence along the Jordan River, to the east of the West Bank. This presence is directed at anyone to the east of Palestine who might be tempted to use it as a launching pad for an invasion of Israel. There is total unanimity among all Israel's security types that this presence is essential, though Netanyahu has recently been hinting it need not require Israeli sovereignty. Perhaps the Jordan Valley will be sovereign Palestinian territory in which Israel has contractual rights to a military presence. I admit I'm personally skeptical. Modern armies being the cumbersome things they are, I don't see how one could arrive on the West Bank suddenly, unannounced, and launch an attack on Israel. Not to mention that no Arab army has tried the full-fronted assault method since 1973, probably for the good reason that it's a harmful exercise. In any scenario Israel will need a powerful and threatening military for the first three or five generations after making peace with all its neighbors, but I don't see why a few thousand troops along the Jordan make much difference. There's a major road down there from Jerusalem, and another can be built from the north, and if there's to be a war IDF forces will be there long before Iraqi or Iranian or Emirati divisions arrive.
Water: this is a serious matter, but ever less so. At the moment we're preparing to lay the fifth major pipeline from the coast up to Jerusalem (if I'm not mistaken), which will be unusual in that for the first time it will draw its water not from coastal springs but from desalination stations. There isn't enough natural water in Israel/Palestine for the 12 million people who already live here, and there's not going to be any more, either. Israel already operates major desalination plants, while holding the world record for recycling water; this trend will have to continue no matter what. I don't have the exact numbers at hand, but Israel already supplies some of the water the Palestinians use, and will probably supply more as their numbers grow, no matter who controls them politically. This means water will be a Palestinian weakness, not a threat against Israel. Anyway, the entire subject is one that can be resolved with money, and need not cost human lives.
Which leaves us with the various threats of low-level Palestinian violence. These are serious. In 2002-2004 Israel needed to reoccupy the entire West Bank, re-build its intelligence sources and networks, and also construct the security barrier; only then was the bloody 2nd Intifada defeated. Its ongoing control is the reason no kassam rockets or mortars are shot from the West Bank, while many thousands have been shot from Gaza. Moreover, only a fool, or perhaps a Swedish foreign minister, would believe that by signing a peace agreement with some Palestinians, there will remain no Palestinian individuals or groups willing to shoot at Israeli civilians from the shelter of civilians towns and villages; those Swedes and other EU fellows will conspicuously not fly into Ben Gurion airport if they ever remotely fear that their plane could be shot down as it comes in to land at the airport which is within range of Palestinian gunmen with easily portable shoulder missiles. Until someone comes up with a way to assure Israel this danger is not acute, I don't see how it will relinquish military control of some sort over the West Bank. Which is not to say that Israel might not move all its civilians back to a line, say that of the barrier. Which brings us to the matter of the settlers.
The real reason Israel insists it cannot go back to the Green line is a combination of security to the east of the airport, and the existence of large settlements, most of them quite close to the Green Line. No official maps have ever been made public, obviously, since the negotiations have never reached completion, but here are a number of plausible approximations. First, the Taba negotiations of January 2001:
Le Monde, and refrains from showing that Israel apparently offered some ground inside the Green Line in return for some of the areas it demanded in the West Bank. In any case, since most of the 2nd Intifada happened after the talks at Taba, it clearly didn't happen because Israel was unwilling to dismantle most of its settlements. In case the map isn't clear, everything in either hue of green was to be Palestine.
Here we've got a projection of what Ehud Olmert apparently offered the Palestinians in September 2008, a proposal they never even responded to. The triangles are settlements to be dismantled. (source)
A cursory glance tells us Olmert wasn't trying to create "defensible borders", since the crazy lines reaching up to Kdumim and Ariel, deep into the West Bank, can't really be defended. But we can see how he wanted the line away from the airport (to the west of Jerusalem), and he wished to uproot as few settlers as possible and was willing to pay with territory from within the Green Line. Some of that territory would have made the Gaza Strip noticeably larger, which may have been one reason Abbas never responded: Gaza is Hamas-land, and why would he want them to gain anything?
Finally, here's the line proposed by the Israelis and Palestinians from the Geneva Initiative.
No matter which map you use, from Taba onwards, the Palestinians get all of the Gaza strip (they've already got it), and just about all of the West Bank, with compensation for what they don't get. I think this demonstrates quite clearly that the inability to reach an agreement isn't about Palestinian sovereignty, which the Israelis have long since agreed to, nor about the size of Palestine. Ariel and Kdumim may still be a noticeable sticking point, but they're not the reason for the lack of a peace treaty. Those would be Jerusalem and the right of return or its corollary, Israel's demand to be recognized as the Jewish State. This has been the case for at least 11 years, if not 45, or 63, or 100.
A personal comment: if I had my druthers, I wouldn't have Israel offering empty areas in the foothills west of Hebron or along the Gaza Strip. I would undo the mistake of 1949, when Israel took over the villages of The Triangle, which in the meantime have turned into cities. If the sense of partition is to divide the land along ethnic lines, then that should be what is done. The Palestinians with Israeli citizenship in the Galilee, the Negev, Haifa and Jaffa all live too far from any line to be transferred to Palestine, and they are welcome to remain Israelis. Yet by moving the populace of the Triangle from Israel to Palestine, without ever physically moving any of them a single inch, the Palestinian minority inside Israel will drop significantly from its current 20.5%. Since the Palestinians will not allow there to be any Jews at all in Palestine, this seems a reasonable proposition. The reality, however, is that in the occasional case where Israeli politicians moot this idea (Sharon in 2004, for example, and Lieberman since then) they are always received with howls of protest, and marked as fascists, racists, brutes and evil. The Palestinian Israelis, you see, are eager for their nation to have its own state, but they don't want to live there. They want to live in Israel.
Which isn't surprising, if you think about it. Given the choice, who would prefer otherwise? Would you?