I think the first question you need to answer, even before you think about the intelligent inhabitants of the islands, is decide what to do about aquatic humanoids. They have the potential to change the setting greatly because they aren't broken up by the islands.
You could have none of any type.
You could have them all part of a huge, diverse empire, that generally simply ignores land-folk and their clumsy ships. Apart from maybe taxing them or charging tolls for ships perhaps.
You could have them embroiled in a huge war between undersea nations, and so generally leave the land-folk alone because they don't have resources to spare on them, and they can't contribute. Perhaps they trade with island-folk for metal weapons and equipment, or perhaps they even keep captive populations on islands mining and smithing for them.
They could have diverse and individual populations of them scattered around just like the island-folk. - In which case, why are they sparse and scattered? Are they confined to undersea islands, separated by the vast blackness of the deeps? Or are there other dangers of the sea that keep the sea-folk from spreading out?
Maybe there is an actual "life-cycle" of the races, where undersea islands slowly rise, and the sea-folk gradually adapt into land-folk. Almost all the populations of the islands used to be some race of sea-folk originally. Or maybe the other way around, and an island gradually sinks. The original land-folk change into sea-folk and then into the mysterious deep-folk which are hardly ever seen by surface-dwellers.
Dwarves could be great ship-builders, whose floating fortresses slowly roam the seas, gathering resources for great expeditions mounted to find their lost homeland.
Or they could be a race of island-folk who live on volcanic islands - sensitive to the trembles of the rock below them, experts at building stone defences to redirect lava flows, resistant to noxious volcanic gases, and cunning at knapping tools and weapons from obsidian.
Gnomes could lurk in islands so densely-forested than only a creature of their size could move unimpeded. Ship crews that stop at their islands to harvest coveted fruits are oblivious that the crops are farmed deliberately to attract them - and their ships full of rats that the are used to communicate with gnomes on other islands.
Tabaxi are a dying race. Their fondness for living on islands with tall cliffs is not suited to their instinctive propensity to push things off them.
Halflings are still a chubby, cheery folk, living restful if short lives on their farms, kept safe from outside forces and steadfastly ignoring unpleasant matters. Such as that every so often, dark shapes arise from the waters around the halfling farms, and harvest some of the crop . . .
