Im going to spoiler this for those of you who dont want to scroll all the way down.
Step One: Finding the location
Step Two: Creating the base of the island
Step Three: Building the base - Part Two
Step Four: Rounding the Edges
Paso Número Cinco: Filling in the circle
Step Number Six: Creating the... Bottom?
Step Number Seven: Fill er' in
Step Number Eight: The Hardest Step
Step Number Nine: Boring parts over, Creativity, ACTIVATE!
Keep in mind this is a basic Floating island. I have created better and larger. Please take this and expand on it.
Hell, I would love it if you posted your own creations that you've based off of this!