There are not necessarily Arab countries that want to take on millions of Palestinian refugees. There is a broader issue that what you suggest is not considered good for the Palestinian cause. I'll give an example. UNRWA uses a specific definition for Palestinian refugees that differs from the general refugee definition used by UNHCR. They define Palestinian refugees as "persons whose normal place of residence was Palestine during the period 1 June 1946 to 15 May 1948, and who lost both home and means of livelihood as a result of the 1948 conflict". This status also extends to their descendants. This means children and grandchildren of the original 1948 refugees maintain refugee status even if born outside Palestine. When you think about it, this is kind of the opposite of what you suggested. It creates a massive class of legal Palestinians who live in and are citizens of other countries (particularly Jordan), but are ostensibly waiting for their opportunity to return (or receive some other "durable solution" such as compensation).

In general, Arab states and Palestinian leadership argue that naturalizing refugees would undermine their right to return to their original homes. You can interpret this cynically: because many Arab states are not too friendly with Israel, having a massive class of refugees putting political pressure on them could be advantageous, and is probably one of the only ways to "defeat" Israel as a jewish state (because if all of those refugees had the right to live in Israel, jews might become a minority.) But it is true that removing refugee status without a just solution would erase Palestinian claims and rights under international law.