The "Mid East" (however it is defined) is a geographical construct, which includes Israel.
The "Arab World" is a construct based on ethnicity and national government -- Israel is not included, by definition. You will note that they rank the Palestinian Territories (democratic facade). They don't say that Israel isn't "democratic" -- they don't say anything about it, because it's not an Arab state.
Good to see that someone else actually knows how to read a map and distinguish terms necessary to understand basic geography.