"Come on, let's move," our tour guide said with quiet urgency. "Move into the corridor, this is real."

Three minutes later, as we grouped together in the corridor, there came a crump. It was later confirmed as an explosion in south Tel Aviv, near the Department of Defence. Over the next hour, although the siren didn't sound again and there were no more explosions, there was a light show over the skies to the south of the city, as incoming rockets were countered in mid-air by the Israeli rocket defence system.

Through it all, the traffic kept moving, planes kept taking off and the volleyball players on the beach kept on with their game.

Their calmness was reflected throughout the city. The television and radio reports are all about the escalating attacks from and into Gaza, and the rising death toll on both sides. Every resident of Tel Aviv we speak to is aware of the crisis and of what its implications might be. The know 30,000 army reservists have been called in, and there is talk of Israel launching a land attack on Gaza. This could be not just a crisis, some commentators are saying, but the beginning of all-out war.

Look at the streets of Tel Aviv and you wouldn't know it. The people here seem used to these situations – they have lived under the threat of rockets, of suicide bombers and other terrorist attacks for too many years. They know when to worry, and they are not too worried yet.

Earlier in the day, as rockets were flying into towns in the south, we'd flown to Metula, Israel's northernmost town, on the border with Lebanon. The two nations are divided there by wire link fences through which the residents can watch each other's trucks going back and forth on the roads.

"When I open my window in the morning, I say, 'Good morning, Hezbollah!' Because we are just 600 metres away," Rivka Jacobs, a retired teacher, told us cheerfully as she showed us around.

Jacobs came to Israel from upstate New York in the early 70s. Even though there was violence even then, she and her husband wanted "to live in a community, we wanted to farm, and here is where we stayed".

The town has been affected by the related violence of Israeli-Lebanese conflict ever since. Its houses have bomb shelters in their gardens. Jacobs recalled sleeping with her children in the one secure room of the house, an Uzi on the mattress beside her, in the late 1970s. And then there were years of Katyusha rocket bombardments.

"I have absolute identification with them," she said of the Israelis in the south coming under rocket fire from Gaza, "because that's what we lived under for years".

Back in Tel Aviv, after the sirens had sounded and the explosion was heard, our guide advised how long we should wait – "10 minutes, then it is all clear" – and then it was back to life as usual.

Judith Whelan travelled to Israel this week on a study tour hosted by the NSW Jewish Board of Deputies.