The island emerged out of the Mist, perhaps like condensation. No one knows if it emerged whole or partial; if the island took many millenia to form or in the blink of an eye. It was an age of no memory, and so we have no stories about what happened in the Age of Mist. It was filled with magic - at least that is how it was found by the first wave of people, and some parts of the world still exhibit this, being great sources of Mist-ical power, and filled with the creatures of old.
This age was filled with all sorts of Mist-ical, mythical and magical creatures, deriving their nature from the Mist. None showed intellectual traits or understanding of abstactions or symbols (though some of the most potent symbols come from this time), and have very little conception of the march of time, being limited to the here and now. Many creatures had influence over magic in some way; not in a creative or planned manner, but simply instinctive and reactive.
Many of the Old Ones, beings embodied by the forces and other aspects of nature, come from this age (fewer having human roots), they are beings that have grown, like ancient trees and have ceased to be beings existing within a realm but realms themselves. Unlike the Transcendents (for a later description), they have not transcended their instinctive limitations, which have simply grown and expanded in time. Their intelligence has only grown through interaction with humans and other sentient beings, but they have no impulse towards this evolution. They bestow blessings and curses, and sway the fortunes of the people, but more through whim than will.
At this time there were no humans - all humans have arrived through the Mist to the Island, coming from different realms or dimensions. With each wave the Great Island became more defined and the Mist receded more and more. Things we know as the Laws of Nature seemed to condense and become more defined as each wave of people came, and the old powers have gradually receded.
Next installment with be the nature of magic after the first wave of people arrived at the shores of the Great Island.