Data Islands are group of associated data tables. In qlikview it is not that always every table in your data model will contribute to form a Star Schema. There might be few tables which are not associated to any other tables in the Data Model and the data from these tables will be used in your Dashboard for reporting purposes.
Example: Table1, Table2 and Table3 are associated to for a Star Schema.(We call say Group 1) and Table A and Table B form are associated to form one more group say Group 2. Group 1 and Group 2 are Islands as they do not have associations.
Also refer to the below links for more detailed explanation with examples.
