My city has,
• City 347,483
• Density 2,400/sq mi (930/km2)
• Urban 523,994
• Urban density 3,785.0/sq mi (1,461.4/km2)
• Metro 839,631
• Metro density 103.3/sq mi (39.9/km2)
The city limits are just under 150 square miles. And this is a pretty big agriculture city.
In golarion, I think only Absolom is bigger with a higher density. Most other towns and city's in the golarion setting you could fit on the island. Keep in mind this island already held a town of Cyclopes for a very long time and was able to feed at least a hundred of these guys.
So you could have a town of over 2000 people and still be in good shape with modern farming techniques. Or in golarion, have a Druid or two help with your farming, having domestic herd animals will help and don't need the space people do but that does mean farmland for grazing, or animal feed. And fishing is a staple food supply in many places.
So the island is plenty big enough to settle with a good population of people, you just can't look at population standards in a modern era.
And if it still isn't big enough for you, magic is the solution. There is a lot of dirt that can be moved from a 500 foot tall Mesa that is several square miles in area.
So a square mile, is 5280 ft multiplied by 5280 ft, with a 500 foot tall Mesa, we get with a single square mile of Mesa moved with magic is 13,939,200,000 square feet of rock dirt and filler that can be moved into the surrounding sea to expand the island, and this also discounts doing the same to the ocean floor to dredge up some land.
Don't have the time or people to do it yourself? Animate object, and let them work it out.
Best thing about golarion is that you have options to solve problems.