I talked to an Israeli (we were both vacationing in Vancouver, BC). There never was a feeling of invulnerability, but rather of containment and a tolerable level. Hamas would lob some rockets over the border, the Iron Dome would shoot them down, maybe some would get through. You learn to live with a certain amount of risk.
What this attack shattered was the feeling that Hamas is a threat that could simply be managed and ignored. It should also shatter the illusion that continued mistreatment of the Palestinian is a viable way forward. Unfortunately, I think the Israeli leadership will only take the first lesson.