It's hard to disagree with this analysis from Hussein Ibish:
The anti-boycott law isn't about protecting Israel from boycotts that target the country in general, because basically these don't exist in reality. It's about protecting the settlers from boycotts of settlement goods, a movement that is very real and growing, especially in Europe. But the anti-boycott law is only the tip of the iceberg in a profoundly anti-democratic shift in Israeli political attitudes. This is partly a consequence of a siege mentality, but it also has a great deal to do with demographic shifts among the Jewish population.
The large Russian immigrant community is better organized than ever, and the extreme religious community is growing at a much faster pace than the rest of Israeli society. Both constituencies are pushing Israel toward a new form of authoritarianism, within Jewish society.