It is a small, rocky, wind-swept island, and totally uninhabited, even by pirates from the surrounding islands. The island is so-named because the pirates of the Basilisks have taken to dumping the severed heads of their victims on its shores, which rot away into large piles of sun-bleached skulls.
In the books
Pirates in the Basilisks enjoy decorating their hulls and masts with the severed heads of their victims on spikes. When the heads get too rotten to stay up, they replace them with fresh ones, and take the old ones to Skull Island. It is said that they leave them there as an offering to some dark god - though it isn't clear if they all believe this, or if some just do it for tradition. The shores of Skull Island are lined with piles of skulls, bleached white by the sun.