In addition to its role as a Material it also appears as Toon Link's Standard Outfit (Great Sea). Link has a recolor of his Standard Outfit based on the Island Outfit, Hero's Tunic (Great Sea).
The Island Clothes are based on the unnamed outfit Link wears as the beginning of The Legend of Zelda: The Wind Waker before switching to the Hero's Clothes. They are visible when Link wears the Hero's New Clothes in the second playthrough of The Wind Waker. Link has an unlockable recolor of his Standard Hero's Clothes based on said outfit.