Landmasses are categorized depending on their size, and proximity to water bodies. An island is a secluded piece of land surrounded by water on all sides whereas peninsula is a piece of land surrounded by water on only three sides.
Comparison chart
Access to an island and peninsula
Islands can be accessed only via air or water as they are not connected to any land masses. Peninsulas are connected to the mainland by an isthmus and hence can be accessed via land, air and water.
Types of islands and peninsulas

Types of islands
Islands are mainly of two types, continental, and oceanic. Continental islands are part of continental masses of land that are surrounded by water on all sides. Oceanic islands are almost always formed due to volcanic activity or due to coral formation. Continental islands are inhabited whereas oceanic islands are not.
Types of peninsulas
Peninsulas are categorized into headland, cape, promontory, bill, point and split types. Headlands, cape and promontory are peninsulas that are high and steep, and often projecting out towards the water. These are hard rocky structures formed after erosion of the softer part land by the sea or ocean. A point is a tapering piece of land extending into the ocean, and a spilt is a deposition landform and is often a type of beach.

Formation
How islands are formed
Continental islands are landmasses that broke off from the mainland a long time ago and drifted out into the sea. Oceanic islands formed due to volcanic eruptions and accumulation of lava above the surface of water, or due to accumulation of coral.
How a peninsula is formed
Most commonly, peninsulas are formed due to increases rise of water level due to increased temperatures and typically where the land is at a low elevation. Gradual rise in the water level leads the land to be surrounded by water on three sides, and develop into a peninsula.
World’s largest island and peninsula
Though the largest known island is Australia, it is known as a continent island, and Greenland is classified as the largest island. The largest peninsula is the Arabian peninsula. Groups of islands are called archipelagos and the largest known archipelago is Indonesia comprising of 18000 islands. Groups of islands are often favourite tourist destinations due to the moderate temperatures and scenic beauty associated with these landmasses.
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