Island restricted by absurdly erratic standards (8)
I believe the answer is:
criteria
'standards' is the definition.
('criterion' can be a synonym of 'standard')
'island restricted by absurdly erratic' is the wordplay.
'island' becomes 'i'.
'restricted by' indicates putting letters inside (I've seen this in other clues).
'absurdly' indicates anagramming the letters (I've seen this in other clues).
'erratic' with letters rearranged gives 'crteria'.
'i' going inside 'crteria' is 'CRITERIA'.
(Other definitions for criteria that I've seen before include "'Standards, reference points (8)'" , "Principles for decision" , "Principles for judging" , "Reference points for evaluating" , "Principles on which to base a judgement" .)