In the dangerous streets around the hospital in Beit Hanoun, the buildings were, by and large, still standing on Friday afternoon. By Saturday morning, after a day of intense Israeli bombing and shellfire, the hospital in the northern Gaza town was standing in a sea of rubble, its walls pockmarked with gunfire and torn by shrapnel.

The skyline, until so recently regular and neat, had been transformed into something torn and ragged. The tops of a pair of minarets had been blown off, and the graves in a cemetery smashed to pieces. Houses, offices, apartment blocks and shops were collapsed or collapsing.

The bombs that hit these streets in the time between the Observer's two visits were visible, and sometimes audible, across the city as huge explosions sent up eruptions of grey smoke into the sky.

What happened here in Beit Hanoun, and in other neighbourhoods of Gaza hardest hit by the Israeli assault, will inevitably demand an explanation: whether the extremity of violence unleashed in these residential areas in recent days was proportionate, or if the destruction amounts to a war crime.

Those are questions for the days ahead. On Saturday, however, in the midst of a 12-hour humanitarian ceasefire, the concerns were more immediate ones, as thousands of Palestinian residents flocked back to their ruined neighbourhoods to see what remained.

As they came on foot and in cars, they were accompanied by fire engines, bulldozers and ambulances of the Red Crescent, whose crews by mid-afternoon had recovered 85 bodies, many of them partially decomposed, buried under the rubble of Gaza's most damaged neighbourhoods. Officials said the death toll among Palestinians had passed 1,000.

If evidence were needed of the failure of diplomacy, the truce that allowed Palestinians to return safely for the first time in days was the only apparent outcome from the mediation mission by US secretary of state John Kerry and UN chief Ban Ki-moon over the past week. Indeed, last night the week-long ceasefire they had hoped to negotiate as a precursor to a wider deal appeared in peril after the Israeli military said rockets had been fired into Israel, while Hamas appeared to reject an extension of the truce.

In some places visited by the Observer whole blocks had been flattened, dozens of buildings at a time reduced to a moonscape from which the smell of death at times wafted. We came across Mohammad Shaweish at the entrance to Beit Hanoun, sitting on a cane chair in a pink ground-floor room that had been ripped open to the street, an electricity pylon lying black and smouldering outside where it had been felled. His family occupied four homes on this corner, all severely damaged by the air strike that ripped off the outside walls.

"We escaped a week ago. We came back at just after eight when the truce started. We took refuge in one of the UN schools," he said as he climbed into the house of one of his relatives to retrieve pots and pans from the kitchen.

"My house, my house," said another man, hitting his head with his hand. Nothing, it seems, had escaped the flying pieces of white-hot metal thrown out by the bombs – not electricity cables, or cars left behind, not windows or doors.

Where Israeli tanks and bulldozers have been there are sandy roads pushed through gardens, parks and farmland, banks of dirt thrown up from where the tanks fired from.

Near the hospital a man leads a horse out of the ruins, a long streak of blood staining its hindquarters where it was struck by shrapnel. Elsewhere, we come across donkeys and cattle killed where they were left tied up in the street, scorched, stomachs swelling with gas.

A group of men show us the home of the Shabat family, seven of whom died when it was flattened by a bomb.

As people search through the debris for their belongings, packing what they can in to taxis, trucks, rickshaws and donkey carts before fleeing the town, Israeli tanks stand by, their crews invisible inside. When one tank rumbles into life and changes its position, it triggers a panic in the crowded streets ahead of us, as cars attempt to reverse or make turns in the rubble.

But in this 12 hours of temporary truce, the Israeli tanks move only on the perimeter of the ruins, visible in the clouds of dust and exhaust they throw up, or as green moving shapes in the far distance.

It is hard to imagine that anyone who did not flee could have survived the attack, but a few did.

"We lived through a night of horror. The shelling was all around our house," says Hanan al-Zaanin, standing with four of her children outside their home.

In Quds Street, close to the hospital, a body is dug out of the rubble and carried past a row of demolished houses. Someone says it is a fighter. We drive on to Sikka Street, close to the Erez crossing, making frequent diversions for roads blocked by broken buildings. Here the sand berm of the Israeli border is visible to one side, and the concrete border wall ahead. Here there are more families sitting in the ruins of their homes or digging for what is left.

Zoheir Hamad is with his wife Umm Fadi next to a home that is little more than a few barely standing walls; the water pumping station next to them is also badly damaged.

A short distance away a damaged Israeli anti-mine vehicle sits in the road, bent and torn by an explosion. As we speak, a man passes, cradling the shape of a machine gun wrapped in a blanket, like an infant.

"We left at the beginning of the war," says Zoheir.

"It is the first time that we have managed to come back." Umm Fadi adds: "We're staying in the UN school in Jabaliya. We came to get clothes for the children. But there is nothing left."

It is the phrase we hear throughout a long day: "Nothing left." And it is true. Whole areas that were once inhabited have been reduced to a landscape of earth and dust and broken shapes.

Although in places there is evidence fighting has taken place, what is hard to comprehend is the Israeli justification for the scale of the destruction, save destruction for its own sake in pursuit of a policy of collective punishment.

Ahead of probable international criticism over the scale of the destruction, some Israeli political figures were trying to deny the scale of the attacks was in any way disproportionate.

"There is no proof that any kind of gratuitous damage is being inflicted," said Israeli legislator Ofer Shelah of the centrist Yesh Atid party. He added that Israeli troops were "fighting with an enemy dug in within the civilian population, dug in underground or within the houses there … those are the consequences of such a fight".

Despite the truce, not everywhere was reachable. In two border areas, ambulances were unable to approach because tanks fired warning shots at the vehicles, the Red Crescent said.

And if Beit Hanoun is largely destroyed, Shujai'iya, an eastern neighbourhood of Gaza that has been shelled and bombed for a week, is incomparably worse. The destruction appears to be concentrated on three areas – Mansoura Street, Baltaji Street and Nazaz Street.

In the midst of an area of rubble the size of two football pitches in the last of these areas, we meet three brothers standing on what was once the four-storey building in which their families lived in four apartments. Next to them is a bomb crater measuring 10 metres across and six metres deep.

Alaa Helou, 35, a carpenter, points to what is no longer there. "That was a two-storey house. There was three storeys and over there was four storeys high. We came to see our house. We thought it might have been damaged by a shell. But there is nothing left of it."

"We spent 20 years making our place nice," says his older brother. "We spent all of our money on our homes."

If there is something worse than the scenes of destruction, it is what is visible in the faces in Beit Hanoun and Shujai'iya. A man is led away down one street in Shujai'iya; staggering and blind with grief he his held up by two others. Women sit in the dust, crying.

We find 33-year-old Rifaat Suqr sitting outside his gutted house, a stunned look on his face. "It is like an earthquake hit this street," he says. "An earthquake."

Except that this was not an earthquake. This was the work of men.