Israel passed through the annual observance of "Land Day" in relative calm today as thousands of Arab Israelis attended peaceful rallies to protest their treatment as a minority in the Jewish state.

While an Israeli police helicopter circled overhead, about 2,000 of the country's 600,000 Arab citizens crowded into the main square of this town northeast of Tel Aviv to hear a succession of speakers address them from the platform of a flatbed truck. Farther to the north in the heavily Arab Galilee region, 10,000 people attended a similar rally.

But largely because of the pleas of local Arab officials, a heavy Israeli military presence and the imposition of curfews in the occupied West Bank, the day passed without the kind of violent clashes that marked the Land Day observance last year.

Israeli authorities said five civilians riding in a bus were injured slightly by stones thrown from the Dheisheh refugee camp south of Bethlehem, where a curfew was imposed. In the Galilee, a 7-year-old Arab was killed and two others injured by a hand grenade explosion that police said appeared to have been an accident. They said the children had been playing with an old grenade they found in a field.

There also were commercial strikes in East Jerusalem and several other Arab towns, but no widespread disturbances were reported.

United Press International said Israeli radio reported that one Palestinian youth was killed when troops fired on demonstrators in a village near Hebron. An Israeli Army spokesman said that the body of one Arab youth was brought into Hebron Wednesday and that the cause of death was under investigation.

In 1976, six Arabs were killed as a result of Land Day demonstrations.

The annual observance originated as a protest by Arab Israelis against government confiscation of their land. At the birth of the state of Israel in 1948, this town's population was 4,000, and Arabs controlled about 17,000 acres of land in the surrounding area, according to Sharif Dessan, the headmaster of a local high school. Today, he said, the population has grown to 20,000 while Arab-owned land amounts to less than 3,000 acres.

Sitting in a coffee shop during the rally, Dessan said in recent years Land Day has become a means to voice dissent on broader issues and to show solidarity with the Palestinians of the occupied West Bank.

He complained of job and educational discrimination and cited the recent decision by the Israeli government to increase government benefits to large families while effectively excluding the country's Arab population. The action is being challenged in court by two Arab members of the Israeli parliament.

"Even a child can understand that there is discrimination against the Arab," Dessan said. "The Jewish government wants the Arab to be not more than an animal, to eat and sleep, not to speak, but to thank God he is living in this state."

Since Israel captured control of the West Bank from Jordan in the 1967 war, Dessan added, the Arabs of Israel have grown closer to the 800,000 Palestinians who live in the occupied territory.

From appearances, authorities were far more concerned about possible disturbances in the West Bank than in the Arab regions of Israel.

The Army set up checkpoints in the West Bank towns of Nablus, where a partial curfew was in force, and Jenin.

Jenin is the site of a mysterious illness that has struck more than 300 Arab schoolgirls. The cause of the illness still has not been determined.