The archipelago was set by the Valar after the rebellion of the Noldor to shield Valinor and Tol Eressëa. They had an uncertain number and no charted course could go through them, and as such they ensnared any ships trying to reach Aman without permission. Additionally the seas about them were filled with mists. The isles were enchanted, and anyone who set foot on them fell asleep forever.
The Isles were apparently either removed from Arda or at least made less sinister after the War of Wrath, as Tol Eressëa could be seen from Meneltarma on Númenor without problems. Certainly after the Akallabêth they were gone.
There is some confusion in the texts about these islands: the names "Enchanted Isles" and "Magic Isles" are both used, and at points it seems like they are different isles, but at other points they are equated as the same.
In the History of Middle-earth series the isles are also the location of the Tower of Pearl where the "sleeper" (possibly Tuor or Idril) rests, a reference which was later dropped from the mythology, although it remains uncertain if this was due to compression or rejection.