On the other question, yes monsters do spawn on small islands - unless it's fully covered with no-spawn zones as from workbenches.
It's just a small chance, because the spawner first picks a spot, then checks what may spawn there. If it's an empty list, like in deep non-ocean water, then nothing spawns that cycle.

In my current solo world, I sailed by a tiny spot of plains in the middle of ocean on the way to a very distant Elder marking. My tech level at the time was bronze pickaxe. It still is.
The island was empty except for a patch of expandable land and a small hill that I might build my home on top of to keep the fires from going out due to tall waves.
It looked perfect for a home base with immediate capability to farm plains type crops when I get to them, so I don't need to make a second farm then.
So I marked it on my map.

When I returned with materials to set up a portal, I was lucky that it was night.
There was a squad of nassty hobbitssess, uhm, filthy greenskins, chilling at the other side of the hilltop. I only noticed in time to turn my ship away because one of them carried a torch.

That was the starting sign to a long and bloody campaign to claim my chosen haven.
In the end I did get it, and I managed to scrape by some iron from an outdoor node near the traveling merchant to put up stonecarver, set down the stone foundation for my long term home.. and now I'm slowly adding flat surface area for my farm.

When all that is done, I think I will sail towards yonder Elder location to collect my second head.
Man, I love how stuff like this is actually possible, if you're persistent and understand how to secure even pixel-small winnings.