I am aware that digital geo-data is available, I even eluded that in the post: “there are at least 5 providers of high-quality digitized geographic data that I’m aware of…”

That being said, (a) I’m pretty sure that Google also buys geo-data in other countries, for example Europe, and doesn’t get it for free or generate it themselves (an effort which is also quite expensive), and (b) as we know that they have cities locations then to get the Israel map to have the same level of details as neighboring countries they just need to add major roads; The Israeli Mapping Service that Shlomi referenced above sells the entire national road map (down to details for local roads) in digital form for about 6,000 NIS. That is not a lot of money even for small businesses.