Why did the Israelites dress casually? Does it have anything to do with their religious views?

I don't know what you mean by "Israelis"? Is it the people in the current state of Israel, or is it the religious Israelis - the Jews.

If it's Israelis in the state of Israel, since there are many faith communities in Israel - Jews, Christians, Muslims ......, and possibly none - it's not unusual to see Israeli nationals in Israel who dress casually. It's not unusual to see casually dressed Israeli nationals in Israel.

And if you're talking about religious Israelis - Jews - I can tell you some of what I know. First of all, religious Jews are very particular about their clothing, they don't wear casual clothes, the most obvious features are the men's chapeau and the women's long skirts (traditionally women in Jewish families don't wear short skirts and pants, only long skirts), and they are very observant of the rules of Judaism. However, there are some Jews who do dress casually, and the reason for this is that these Jews are no longer practicing the Jewish faith, but are still Jews by heritage.

I used to work for a Jewish company, and the owner's family were very religious Jews. The owner wore very formal shirts and pants on the hottest days (I never saw the owner or any other Jewish men in the company wearing shorts), the owner's wife and her granddaughters were very conservative in their dresses and always wore long skirts, and the ladies in the family always shaved their heads and wore wigs after they got married, and the company's one eighty year old Jewish lady was very hairy and wavy. An eighty year old Jewish lady in the company had thick, shiny hair, and I wondered at first how she took care of it, but then I realized it was a wig. But we also have a young married Jewish girl at work who often wears short fashionable dresses and I am sure that her hair is real, and the reason she does so is because she is no longer practicing Judaism.

Besides that, there are many sects of Judaism, and different sects have different customs, so real Jews don't always dress in traditional clothing, depending on their sect and whether they are religious or not. So I'm not surprised that you see casually dressed Israelis (Jews), it's normal.