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As this question asks for an analysis of motive, you may have different answers.

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Israeli policy (in terms of articulated positions) is very unclear with regards to the West Bank. What seems most likely to me is that they are trying to redefine borders by creating large settlements in key areas, like Maale Adumim, Modiin Ilit, and others, which is somewhat different from your view. Although you can contrast that with settlements like Ariel which are (for tactical reasons) useless in achieving that objective. So, while I lean towards the "recreate borders" premise, I am not sold on it. If the settlement policy becomes more pronounced than it is and we have upwards of 300-400 settlements, withdrawal will become nearly impossible, leading to a requirement (if Israel is to be civil) of annexation and citizenship for Palestinians.

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