The technical reason why the Zionist Entity participates in Eurovision, as far as I remember it, has to do with the radio infrastructure built during the Mandatory period placing the colony in the European Broadcasting Area, and thus allowing it (or rather its public broadcaster) to join the European Broadcasting Union, which confers with it the right to participate in the Eurovision Song Contest. This is related to why Morocco participated in 1980, and why Tunisia and Lebanon intended to participate in Eurovision but later withdrew.

Australia has also participated in Eurovision since 2015, despite not being a member of the EBU, because they got special permission.

As said, though, this is the technical reason, but in this household we like to think POSIWID, in which case it's important to remember that countries can be suspended from participating in Eurovision, and the reason why the Zionist Entity hasn't is because its participation has always served a propagandistic role. In fact every country's participation in Eurovision is just propaganda — pure "national branding" and spectacle under the extremely thin veneer of "apoliticality".