It may be confusing to know the difference between the two until you realize that Jews may be connected to religion while Israelites refer to the people who are living in Israel. Most people who are living in Israel may be Jews because they follow Jewish traditions.
There are some Jews who may be living in places other than Israel. In fact, there are a lot of American Jews right now who are still holding on to their customs and traditions as Jews, and there is nothing wrong with that. The fact that they are able to stay true to their beliefs is admirable, especially since some of them are living far from Israel.