Is it legal?

Yes! the Segway is a legal vehicle!  Israel Ministry of Transport and Road Safety has installed a specific regulation authorizing riding on a Segway in Israel (with the approval of the Knesset Finance Committee, March 2006):

 

The law states that:

The segway operator's age must be 16 and over.

The speed limit is 13 mph around pedestrian zones.

Operators must drive only in designated zones for pedestrians, ie sidewalks, trails, Boulevards etc.

The segway cannot be used for travel on roads, except for when a pedestrian way is not available.

No special driver’s license is required for riding a segway.