According to Schwartz and Wilf who wrote a recent book on this topic, the number of UNRWA registered refugee descendants is closer to seven million as of 2019, and of course growing exponentially. In 1949 it was about 750,000 actual refugees.
They are not talking about right of Palestinian “refugees” (descendants) to return to Palestine. They are talking about the right, supposedly guaranteed by a UN cease fire resolution, Resolution 194, for refugees from the 1948 war to return “in peace” to their former homes within Green Line Israel proper.
Many observers believe the failure to address this demand is the reason no peace talks or arrangements have worked. Arafat referred to this as the “two stage” approach, where refugees would flood Israel, Arabs become the majority, and then either vote or riot until an Arab Palestine was re-established.
By the special way UNRWA counts refugees and includes settled naturalized citizens of other countries (done only for Palestinians; they have their own special UN refugee agency by design), the number of refugee descendants is counted at approximately 6 million from an original approximately 700,000 in 1948).
Source: Schwartz and Wilf, ““The War of Return” (2020).
According to a recent book by Adi Schwartz and Einat Wilf, The War of Return, the right of return to Israel of Palestinians is not an insignificant negotiating point or something symbolic which can be addressed with a token return, but indeed the Palestinians’ primary demand and objective. According to Schwartz and Wilf, the failure to sufficiently address the right of return issue is why Oslo, Camp David and similar peace initiatives failed, and Palestinians are still holding out for an eventual restoration of a majority Arab Palestine through the Arafat/PLO “stages” strategy.
https://www.amazon.com/dp/1250252768/ref=cm_sw_r_cp_apa_i_4n-KFb327KC47 New book by Einat Wilf and Adi Schwartz reexamine this claim. It's an interesting read knowing that both of them are considered from the Israeli political left. The premise of the book basically states that the "right of return" is a non negotiable for the Palestinians while Israel and the Western world treat it as a bargaining chip which will ultimately be compromised on. The book further states that understanding the essence of the demand of the Palestinian right of return inherently dismisses Israel's right to exist. This argument is strengthened by the numbers game. If the number if current refugees includes those living in the West Bank and Gaza, then the right they are ultimately demanding is to return to Israel and not The Palestinian territory. The book argues that no country is expected to repatriate refugees that seek to destroy it. Another interesting argument/accusation that is brought up in the book is the role the UN and specifically UNRAW in strengthening this narrative, which is harmful and unrealistic. They argue that under International law the right of return is promised solely to the first generation that had to leave/flee their homes, and the original responsibility of this organization was to help the Palestinians to either achieve that goal OR find suitable alternatives (rehabilitation in adopting countries).