It was where King Edmund discovered a pool of water that turned all things into gold.
It was a low-set island about twenty acres in extent, and the whole island sloped up to a rocky summit, which sheltered a natural harbour on the south side of the island from strong prevailing north winds. The weather was unpredictable, and prone to sudden rainstorms.
Two fresh-water streams fed into the sea near this harbour. The eastern one was fed by a little mountain lake whose water turned anything dipped in it into gold. The other originated from an unknown inland body of water, and was surrounded by trees where it met the coast.
Nothing lived on Deathwater Island, except for seagulls, coarse grass and heather.
Exploration by Caspian X
Deathwater Island was explored and named by King Caspian during his voyage aboard the Dawn Treader. The ship anchored at the island's southern harbour to wait out a gale. After the storm blew over, the ship's captain, Drinian, suggested watering at the eastern stream, but the rest of the landing party over-ruled him in favour of the sheltering trees by the western stream (it had just begun to rain). After watering, King Caspian, Queen Lucy, King Edmund, Eustace and Reepicheep, as well as other travelers on the Dawn Treader, decided to explore the eastern stream.
After tracing the stream to its source, the group sat down in some heather on the cliff above the lake, and accidentally discovered the sword, mail-shirt, helmet and dagger of a Narnian lord, along with several Narnian coins.
Their curiosity aroused, the group came down and around to the lake, where they saw what looked like a golden statue of a man lying on the bottom (as they discovered much later on their voyage, this was actually the body of the Lord Restimar). King Edmund dipped his hunting spear in the water, trying to discover its depth, but the spear grew suddenly heavy (having been turned into gold), and he dropped it. While the party was puzzling over this, Edmund noticed that the toes of his boots had also been turned into gold, and warned everyone to get back from the water. Caspian tested the pool's effect with a sprig of heather, and then claimed the island for Narnia, named it Goldwater Island, and ordered the others not to tell anyone about the lake.
Overwhelmed by the thought of inexhaustible riches, Caspian and Edmund were on the verge of dueling over Caspian's claim to authority over Edmund. The brief vision of Aslan, who appeared on the hilltop above them, cured the party of their greed, and indeed made them forget the whole incident. All they remembered was that they had found the body of one of the seven Narnian lords, and that the island was under some sort of horrible enchantment.
Reepicheep (possibly inspired by Aslan) suggested the name of "Deathwater Island", and Caspian agreed. The Dawn Treader set sail a few hours later, and never landed on the island again.
In the Voyage of the Dawn Treader film, Deathwater Island and Dragon Island were one of the same place. Also, the island was a volcanic wasteland, and the pool was located in a cavern below the ground.
The Deathwater Island scenes in the Voyage of the Dawn Treader film were filmed on Whakaari Island, New Zealand (AKA White Island).