Bone Island is somewhere off the coast of the Southron Wastes, likely south while still in the tropics. It is unclear how far it was from Wavedancer when adventurers visited. It has jungles with a primitive stone age population of pygmies, who worship a demon or otherwise seemingly undead-demonic local god known as Kyr'orvrad. They offer him sacrifices of bones, and collected Ashrim bones in particular.
The island has white sand beaches and a mist-shrouded mountain with a temple to the terrible bone eating god. There is vague hinting that Kyr'orvrad may have been a kind of volcano god, except there is no indication the mountain is volcanic. There is a great deal of limestone, which is made of marine skeletal material, like white sand beaches. It might instead be the case that the island is an atoll that previously had a volcano and now has a "bone" mountain instead. One approach through the jungle to it involves the mountain seemingly having a life of its own (or sentient power) and opening up a passageway.