I liked to break my island into sections, and then pick an item to base my theme around! For example, I used the wooden stall DIY to make a little seaside market! I decorated each stall with a different collection of items (fish, bugs, clothing).
The section I liked the most was this open-air hot springs on the upper part of my island inspired by real-life Japanese onsens. I made thin 1-block width rivers to look like tiny waterfalls flowing around my hot spring items.
In terms of terraforming, I didn't do too much beyond evening out some areas and a big project where I put my museum at the top-most level and had nice stairs leading up to it! I also moved all my villagers homes to one area and made a little "neighborhood" connected by paths!
Some other popular ideas I've seen people make include: Cafes, restaurants, beach parties and playgrounds! You can find a lot of great ideas by searching ups "ACNH island decorating ideas"
I hope this has given you some ideas! I hope you share what you create as well, I'd love to see what you come up with!