Sierra1

Question: If the island sinks underwater at regular intervals, then what happens to the tiny elephants, giant bees, etc (and the whole ecosystem) while the island is underwater?

Answer: There is a deleted scene on the DVD/Bluray where they attempt to give an explanation. Kailani asks "What happens to the animals when the island sinks? They can't all die!". Alexander replies "Even the mammals develop quasi-amphibian characteristics. They just burrow below the ground's surface and absorb the oxygen through their skin."

Sierra1