Despite bibi's party winning the most seats, there was a strong showing from the center and left. Liberman's party and the shit for brain Bennett both lost seats and sway and a primarily Arab party sits with the 3rd most seats. Considering Israel is far from a two party system there is still talk of Herzog leading a coalition government.
As for the possibility of peace under either, Herzog would be more likely to pursue a deal but without change from the Palestinians, it won't matter. Hamas and Fatah are back to fighting and Hamas is still 100% opposed to any kind of permanent peace. They were recently bragging about rejecting a deal to end the blockade and build a Gaza airport and sea port.