The Island Demo was a sample project created by Unity in 2007 to showcase the new Terrain Rendering Engine released in Unity 2.0. It was many users' introduction to the engine, and quite an impressive demo for the time!
I've updated the project to work with new versions of Unity, currently up to at least Unity 2022 LTS.
The original project source files for Unity 2.x are still available via The Internet Archive’s Wayback Machine: https://web.archive.org/web/20120118004550/http://download.unity3d.com/support/old-resources/files/IslandDemo.zip