The Khartoum resolution.
https://en.wikipedia.org/wiki/Khartoum_Resolution
Now:
https://www.timesofisrael.com/liveblog-september-15-2020/
If most of the Arab league actually starts doing business with Israel, it means they recognise it.
1967? That is like say Vietnam and the USA are still at war.
Basically you are ignoring everything that has happened between Israel and these two countries in the past 20 years.
We know from Wikileaks, that Israel and Bahrain have been operating on normalised diplomatic relations behind doors as early as 2005. More publicly Bahrain symbolised a warming attitude towards Israel in 2007.
2016 through to 2018 Bahrain began far more overt and normal relations, culminating with Bahrain stating in 2018 that Israel had the right to exist.
Similarly with the UAE. Relations began normalising relations through back channels in the early 2010's, when Israel patched up matters after an assassination job.
There has been joint co-operation between these two countries militaries at various stages in the mid 2010's.
Finding common ground with their joint dislike of Iran, pushed them closer together and relations have been fairly normal since 2015, with the final matter meeting official normalisation on the back of the quid pro quo for medical equipment and ceasing the annexation of more territory.
The deal is good, as it is overt, brings about more positive dialogue. It will also hold Israel to account on their intentions to annex more settlements. The deal collapses if they do. So credit is due to all participants, Donald Trump included.
I just don't think it is the monumentuous deal it is being made out to be, given the already normalised relations that were in existence. It is like a rubber stamp for some populism. Which is still OK, given the result.