Island is area for Greek character to occupy (6)
I believe the answer is:
ischia
'island' is the definition.
(Italian island)
'is area for greek character to occupy' is the wordplay.
'area' becomes 'a' (maths abbreviation).
'for' means one lot of letters go next to another.
'greek character' becomes 'chi' (letter from the Greek alphabet).
'to occupy' means one lot of letters goes inside another.
'is'+'a'='isa'
'isa' going around 'chi' is 'ISCHIA'.
(Other definitions for ischia that I've seen before include "bits of hipbone" , "Italian island" , "Volcanic island in the Tyrrhenian Sea" , "Island at the north end of the Bay of Naples" , "Parts of pelvis; isle near Naples" .)