Since 1988, Palestinians celebrate the Independence Day on November 15.  However, how come Palestinians celebrate this day while they are still under occupation?

In fact, Palestinians celebrate the declaration of an independent state in Diaspora, a decision taken by the Palestinian National Council in it 19 round in Algiers on November 15, 1988.
The significance of this day is not the declaration of independence, rather the declaration of the Palestinian Peace Initiative that very few hear of or even consider.
On this day, Palestinians gave up 78 percent of historic Palestine for the sake of achieving peace in the region by accepting to establish the Palestinian state on the West Bank and Gaza Strip only based on the United Nation’s Security Council resolutions 242 and 338.
These two resolutions state that Israel should withdraw from land occupied in 1967 and the establishment of a Palestinian state on this land, with Jerusalem as its capital.
Such a declaration is a very big concession.  Following this declaration, Palestinians became open to negotiate with Israel for a compromise and end the conflict. This led the Palestinian Liberation Organization (PLO) to recognize the state of Israel in what was called, the Declaration of Principles (DOP). Israel however, did not recognize the state of Palestine.  It only accepted to negotiate with the PLO. 
Negotiations afterwards led to signing the Oslo accords, which was supposed to lead to the establishment of a Palestinian state, step-by-step.
For Palestinians, November 15, became a day to celebrate, with hope that the state in Diaspora will become real on the ground.
In the early 90s, Independence Day was a day to organize anti-occupation protests and demonstrations.  The Israeli Security Service, (the Shabak) becomes hyper-active in the period and usually arrest thousands of the first Intifada activists, few days before November 15, as "preemptive measure."
As time passed, the "celebration" became pale, lost its meaning, as the West Bank is being filled with Israeli settlements instead of removing them, according to the "Step-by-step" plan of Oslo accords.
During the Oslo period, after 1995, at least 86 percent of the settlements activity in the West Bank and the Gaza Strip since 1967 took place.
Therefore, it was presented to the world that peace in the middle is on its way to prevail, however, more Palestinian land was taken instead of being given back to make the independence day a reality.
Today the Palestinians mark the 17 anniversary of the unreal Independence Day, and the West Bank have shrunk to half by the wall and the settlements.
These settlements and the wall are part of the price Israel gained in exchange of removing the settlements from the Gaza Strip.  Israel spent billions of dollars to keep the settlements in Gaza Strip.  This load has been removed through disengagement.
So, what Independence Day, Palestinians are celebrating?  There is a long walk before celebrating a genuine Independence Day.