Like C.S. Lewis did, make a map. I suggest making an island. Make it an odd shape. Heres an example:
Now add some features. Give it some mountains or a volcano. Put in rivers, swamps, or lakes. (By the way, this is a great way to give your kids a geography lesson without them knowing!) It could have forests, beaches, caves, villages. How about an old, deserted pirate town?
(By the way, islands don't have to be tropical islands. As I've done this with groups, it's fascinating to me that people tend to only think of palm trees, volcanoes and the like. I guess we should thank Gilligan for that. But there are also rocky islands, jungle islands, and since this is an imaginary story, any combination of elements you want.)
Heres what Ive added:
Now decide who lives on the island. Maybe its a clan of long-lost Vikings. Or talking birds. Or two groups on each side that dont get along with each other. This might help you give the land a name.
Finally, start your story by bringing to the island a main character or two. What would happen when two kids get shipwrecked there? Or a time-traveler shows up? Heres what I think Ill do with mine:
A boy has heard about the famed Well of Wishes, where any wish can come true. He and his faithful sidekick, a wise-cracking lizard (parrots are so overdone), set out to find it, following a map they get at a garage sale. (Love those bargains!) But there are so many troubles on the island. The king hence the tropical island castle, of course wont help him. Maybe he even imprisons him. But the boy escapes into the jungle. His lizard meets a long-lost cousin who tells them they need to seek the help of the wise man. (See hut.) The wise man informs them the only way down off the lofty cliffs is to hitch a ride on the guardian of the well, the fearsome Sea Monster. (See monster.) Ah, but how will he befriend the monster? Hmmm. Havent quite worked that out yet. Cant pull the old reptile relative twist again. Maybe this is a good place to bring in the
Cave of Secrets!
Thats my first attempt. Dont stop with just one story! Many fantasy writers revisit their world over and over. Add other islands! Make your land the springboard for many hours of imaginative fun with your kids.