When someone claims that there was no sovereign state of Palestine, or a people called "Palestinians" he is making a particular (and, IMHO important) political argument. The notion of "occupation", under international law requires that one nation captures territory in war from an established and sovereign power. No sovereign Palestinian nation, no occupation.
The problem develops when one uses the word "Palestinian" which could refer to "anyone who lived in the area on the map once known as Palestine" and tries to expand it to refer either to "anyone whose ancestors lived in the area known as Palestine" (which brings up the UNWRA problem -- labeling, in this case only, descendants as refugees) or "members of the expected future sovereign entity of "Palestine" " (which then casts this identity backwards, muddying the issue).
Were there indigenous people? Well, there were people living there -- a claim to being indigenous is debatable. Those people were a mix of religions and ethnicities. We have census numbers and first hand accounts. We have bills of sale and documentation of how land was transferred and how populations migrated in and out. We have histories of the various rulers and administrators of the area, dating back a long time. We just don't have record of a unique nation (even not ruling this region, simply existing) called "Palestinians" in a way which would exclude "non-Palestinians."
This affects a political landscape if not a practical one.