So, Gerry escapes Israel on the plane, Israel gets overrun and the airfield is swarmed. But did the entire city fall? One of the last shots shows what looks like a small, walled off section of the city is where the break in happened. It is then bombed by mortar fire from further in behind another set of walls.
Was that the only section that was lost or was the city screwed?
I don't know if all of Israel fell, but it's fairly certain that Jerusalem/"fortified Israel" fell based on the following:
The zombie swarm instinct seems to be a self-perpetuating/spreading chain reaction.
So even though it was the singing/chanting over the megaphone that stimulated the zombies and drew them all towards a single section of the wall, the swarming continued well after the singing stopped. The noise and movement created by the initial breach likely excited more and more zombies, creating even more stimulus for surrounding zombies much the same way Locust swarms form and grow. And, within minutes of the initial breach, zombies were coming over the top of all parts of the outer wall around those two Salvation Gates.
Jerusalem's primary defense had completely failed.
Due to the Israeli-Palestinian conflict, Israel has had very strict internal and border security for decades, including controversial military checkpoints and partitioning walls. So, with the Mossad being alerted early on about the outbreak, they were able to further strengthen their internal and external defenses, primarily in the form of new high walls, a network of shielded travel corridors, and heavily guarded entry checkpoints (the Salvation Gates).
Carefully controlling movement into and within the city was what allowed them to avoid an internal outbreak for so long. But once the main high wall was breached, zombies began flooding in uncontrolled. The Salvation Gate was overrun in minutes, and explosives used by the military breached the fortified travel corridors, further allowing the zombie swarm to spread.
The Walls of Jerusalem were easily penetrated.
What you most likely saw as a "walled off section of the city" is an area sandwiched between the historic Walls of Jerusalem and the newly constructed high wall:
Here's a real-life photo of the Walls of Jerusalem for comparison:
The Walls of Jerusalem are mostly a tourist attraction, so they're not sealed off like the high walls are in the movie. Additionally, you can see that the walled off area is fairly small, so certainly the airstrip and probably most of the overrun parts of the city they were running through are all located in the Old City of Jerusalem, behind the old walls.
If you look closely at the screen cap, you can also see smoke coming from the buildings just inside the Walls of Jerusalem. Additionally, you can see the zombie swarm scaling the old wall at various points, just as they're scaling the high wall. The historic wall is not nearly as tall, nor as steep/unscalable as the outer wall.
In the book "World War Z" (on which the film was supposedly based), it's pretty clear that Israel abandoned Jersualem as indefensible.
"A lot of Israelis had to watch their houses bulldozed in order to make way for those fortified, self-sufficient residential compounds. Al Quds [JERUSALEM], I believe that was the final straw. The Coalition Government decided that it was the one major weak point, too large to control and a hole that led right into the heart of Israel. They not only evacuated the city, but the entire Nablus to Hebron corridor as well"
By the end of the book, there are several mentions of the Jewish "masada" model of walled cities being the way in which many countries organised themselves after the initial zombie assault.
In the film the infection spreads as the horde seemingly pushes through the entire city, and eventually cornered those remaining at the airstrip (apart from the uninfected that escaped via air travel). So I think the undead horde did take over the entire city.
