Island, for lack of a better name, is the spirit and body of Sentinel Island. She appears as soon as you enter Sentinel Island and gives you the plot quest The Prophecy where you must choose only four of eight people on Sentinel Island to serve you.
She lived in perfect symbiosis with Maxos's magic until he left and Laiken took over the place.She has such great powers that only the Dragons that came later could understand and use it so the island became a synonym to the Dragons.
Note: You can mind read her for a huge amount of Experience: 1400 Exp multiplied by your level. You can do this again the second time you meet her, after you choose your Alchemist, Necromancer, Enchanter, and Trainer.