According to Reference.com, an island is land completely surrounded by water, as long as it's not large enough to also be called a continent. Australia is considered a continent and is 3.5 times the size of Greenland, which is considered the largest island in the world.
Australia is the smallest continent. Greenland lies on the North American tectonic plate, while Australia lies on its own tectonic plate. Residents of Greenland consider themselves islanders, and many people within Australia consider their country a continent. Some islands are man-made, such as the island created for Kansai Airport in Japan. The most heavily populated island in the world is Java with over 130 million people.