That's POSIX, not the C language standard. https://www.iso-9899.info/n1570.html#7.31 lists the library API names reserved for future use; section 7.1.3 in the same document states explicitly that they are reserved.
It's not that the word "island" has any particular significance; it's that all names starting with "is" followed by a lowercase letter are reserved (in external linkage and in the global scope of files that #include <ctype.h>), so that future versions of the language can add more standard library functions along the lines of isalpha, isdigit, etc., without making the current standards committee guess in advance which specific names following that pattern their successors might want to add in the future, and without breaking existing code. (Unless that existing code ignores these rules, which seems to be fairly common in practice.)
It's not that the word "island" has any particular significance; it's that all names starting with "is" followed by a lowercase letter are reserved (in external linkage and in the global scope of files that #include <ctype.h>), so that future versions of the language can add more standard library functions along the lines of isalpha, isdigit, etc., without making the current standards committee guess in advance which specific names following that pattern their successors might want to add in the future, and without breaking existing code. (Unless that existing code ignores these rules, which seems to be fairly common in practice.)