Warm time on small island overlooking a lake (7)
I believe the answer is:
thermal
'warm' is the definition.
('thermal' can be similar in meaning to 'warm')
'time on small island overlooking a lake' is the wordplay.
'time' becomes 't' (**).
'on' is a charade indicator (letters next to each other).
'small island' becomes 'herm' (Channel Island).
'overlooking' means one lot of letters go next to another (down clues only).
'lake' becomes 'l'.
't'+'herm'+'a'+'l'='THERMAL'
(Other definitions for thermal that I've seen before include "Rising current (used by gliders)" , "Her malt became heat-related" , "Designed to retain heat" , "Relating to heat" , "Column of rising air used by gliders" .)