That is actually how it works. It is not against international law to strike civilian areas if it cannot be avoided in order to attack military targets. It needs to be done in a manner appropriate to the situation, for which there is obviously no hard line defined. Assuming that Israel is not lying regarding the military target around/under the location of this strike (which they probably aren't, because murdering civilians without reason hurts their interests), it is explicitly legal without any loopholes or weird interpretations.