Related to this isolation is that islands can become a kind of biological laboratory. Something that immediately springs to my mind is Darwin's finches and how a single type of creature that ends up on an island may end up evolving to fill lots of different niches. I'm thinking this would have the most impact if we started with some very iconic creature and then morphed it into things very different from that. See Dougal Dixon's After Man book for that kind of familiar become strange weirdness.
So what is iconic? You might start with:
- Fairies (but they're already so varied I don't know if it would have the same impact)
- Drow (haha)
- seed-eating bird
- nut-eating bird
You might also get beutifully pure horned monkeys (they don't throw things at you, just look on in disappointment), the ever tasty turtle hobbits, or the isle of the evil drow things all tentacles and squawking drzzz drzzz drzzzz.
It could get really weird if you start letting them morph into plant types. Coconuts have that big floating seed so they can populate new islands. What would elves that used this same technique be like.And what would elves that evolved to prey on those elves look like? (hahaha. I need to play a wizard in someone's campaign and make some of these wierdities).
What weird morph would you put on an island?