It’s a translation from a traditional Jewish (Hebrew) saying that is the most common thing to say when referring to someone who is deceased. You might also refer to a deceased person as “of blessed memory.”
Basically means that their families cherish the memories they have of the dead.
BTW I get the desire to dismiss the value IDF members have or ever had, but non-Zionist Jews also use this phrase, so it's worth understanding what it means.
It's a common honorific for the dead in Judaism (translated from "zichrona livricha"). I don't know Hebrew grammar but I'm assuming it's an objective genitive, more "may our the memory of them be a blessing." In which case it certainly doesn't apply here.