Island with wood is perfect (5)
I believe the answer is:
ideal
'is perfect' is the definition.
('ideal' can be similar in meaning to 'perfect')
'island with wood' is the wordplay.
'island' becomes 'i'.
'with' means one lot of letters go next to another.
'wood' becomes 'deal' (deal is a kind of wood**).
'i'+'deal'='IDEAL'
(Other definitions for ideal that I've seen before include "Textbook" , "faultless" , "example" , "Utopian; yardstick" , "To which one aspires" .)