First! A correction! I got Radz-at-Han (city) mixed up with Thavnair (island).
Anyway, noooo. Australia is only an island in the sense that it's not connected to any other landmasses. Neither is Antarctica, but no one calls that an island, despite being smaller than Australia. They're continents.
Also, Thavnair is pretty clearly analogous to more Mediterranean areas. My impression leans to North Africa or the Middle East, not unlike Ul'dah. I suppose it may be where the Dunesfolk originate.
You're almost right. It seems like Aldenard and Ilsabard encompass different parts of Europe. Eorzea tends to draw on parts toward the South and East, with Ul'dah perhaps being inspired by the Ottoman Empire, Abalathia's Spine drawing on the Carpathian Mountains, Ishgard having the cold and grim fatalism Russians have long been characterised with, the Black Shroud and Gridania seems to draw influence from both early pagan and late medieval periods of the region around Romania and Hungary, and La Noscea being in part reminiscent of Greece (in amalgamation with Britain).
Ilsabard, on the other hand, seems like it might draw more on the West and North of Europe. While Garlean names draw on Latin and there are apt comparisons to be made of them with the Roman Empire, the people themselves seem more Germanic. Can you say "Holy Roman Empire"? If there is a true analogue to Rome, it's probably Allag, who the Garleans certainly have been trying to emulate.
As for the rest of Ilsabard, I don't know much, but it's probable that the cold, northern homelands of the Sea Wolves are part of or close to the continent. I don't think I need to connect the dots about how their ancestors were a bunch of vikings, do I?
I don't know about that. My inclination is to believe Othard will be the location of the next expansion, with Doma as our base of operations. Once we liberate that continent, we then push on to Ilsabard and overthrow Garlemald, and it's possible that we'll be based in Sharlayan for that. Maybe. It depends where Sharlayan is in regards to the continent and what methods of travel we'll have available to us.
But that could all be wrong! Who knows!