According to Professor Samuel Fleischacker, a Fellow of the University Center for Human Values at Princeton, the Institute for Advanced Study in the Humanities at Edinburgh University, and The Institute for the Humanities at UIC. He taught previously at Williams College,
…a nice way to draw the distinction between boycotts of Israel and boycotts of the settlements is that the former attacks the Israeli constitution (the general structure of the state) while the latter just attacks an Israeli policy. So the former implies that Israel has no adequate mechanisms to correct its own bad policies – that the structure of its government and/or society is thoroughly corrupt – while the latter implies precisely that Israel can correct its own problems. Implicitly, a boycott of the settlements affirms the fundamental decency, or potential for decency, of Israeli society, while a boycott of Israel as a whole denies that.
And as Gershom Gorenberg points out there: a targeted boycott of settlements is an act of support for the State of Israel.