They've been pushed to evacuate to shelters further south from Gaza, which is kind of the only option aside from Egypt opening up. Given that this is all caused by Palestinian terrorists entering Israel, I don't think anyone can blame them for not opening up their border to let more in
And obviously there's plenty of innocent civilians who could be admitted no problem, but Hamas is still the governing party with majority support and would undeniably use that as an opportunity to sneak more militants in
There are multiple cities in the Gaza Strip, the largest being Gaza City. They can leave Gaza City to another city in Palestinian territory but can't cross the border into Israel/Egypt.