Facebook first offered "Palestine" as a network, the removed it (offering the West Bank and Gaza instead), the put it back. Issue: whether "Palestine" is a country.
It's not a sovereign state. There is no border, no unified government, no basis in international law to equate "Palestine" - as a political entity - to Sweden, Switzerland, or Peru.
Facebook would do well to loosen up the criteria for what constitutes a network to avoid this controversy. Without a doubt, "Palestine" is a national identity for a large number of people, and it would of course be offensive to dismiss this.
But one of the critics of Facebook's removal of Palestine said that this amounted to denying the Palestinian claim to Jerusalem. That's rather strengthening the argument for removing "Palestine."