DZ IS basically just a massive aeon right? I like to think of Zanarkand as FFX's version of Alexander in some ways.

It makes sense it's out at sea, in fact I was thinking about this the other day...

But anyway, Tidus has only assumed that the real Zanarkand is also an island at the beginning of the game, he does quite quickly realize that his Zanarkand was very different to this ones Zanarkand. So by the time he realizes it's not an island, well by then I think he pretty much knows he's a dream so it's not an issue.

Although yeah, I'm surprised nobody discovered it. I'm guessing the fayth concealed it from the world, and Sin is the only one who can enter or something.

EDIT: Heh Spiras shaped kinda like the UK