Key point: It would fundamentally alter the Middle East and the world.
Israel’s nuclear arsenal is the worst-kept secret in international relations. Since the 1970s, Israel has maintained a nuclear deterrent in order to maintain a favorable balance of power with its neighbors. Apart from some worrying moments during the Yom Kippur War, the Israeli government has never seriously considered using those weapons.
The most obvious scenario for Israel to use nuclear weapons would be in response to a foreign nuclear attack. Israel’s missile defenses, air defenses, and delivery systems are far too sophisticated to imagine a scenario in which any country other than one of the major nuclear powers could manage a disarming first strike. Consequently, any attacker is certain to endure massive retaliation, in short order. Israel’s goals would be to destroy the military capacity of the enemy (let’s say Iran, for sake of discussion) and also send a message that any nuclear attack against Israel would be met with catastrophic, unimaginable retaliation.
But why might Israel start a nuclear war?
If a hostile power (let’s say Iran, for sake of discussion) appeared to be on the verge of mating nuclear devices with the systems needed to deliver them, Israel might well consider a preventive nuclear attack. In the case of Iran, we can imagine scenarios in which Israeli planners would no longer deem a conventional attack sufficiently lethal to destroy or delay the Iranian program. In such a scenario and absent direct intervention from the United States, Israel might well decide to undertake a limited nuclear attack against Iranian facilities.
Given that Iran lacks significant ballistic missile defenses, Israel would most likely deliver the nuclear weapons with its Jericho III intermediate-range ballistic missiles. Israel would likely limit its attacks to targets specifically linked with the Iranian nuclear program, and sufficiently away from civilian areas. Conceivably, since it would be breaking the nuclear taboo anyway, Israel might target other military facilities and bases for attack, but it is likely that the Israeli government would want to limit the precedent for using nuclear weapons as much as possible.