Yeah, Avalon was a bug island that was in the southwest corner of the map. However, Avalon wasn't a place where you had different stats and magic and what not, it was just an island that was made by one of the old lats. There were a few quests associated there, namely the birdshot as well as some heras and I think a part of the level 3 sword quest, but other than that it wasn't that big of a deal. The only other notable thing in Avalon was an NPC that was nearly impossible to kill. He had 50 health and was insanely aggressive. Behind the room with him was a secret bookshelf where you could get a speedboat(horse) that worked on water.

Destiny wasn't south of Avalon, it was just the southernmost place on the mainland. Destiny had some pretty notable quests, but never had a fountain if I remember correctly. Destiny was also much smaller than Avalon too in terms of size. It had more quests, like the pyramid and the Mario style tower, but it was definitely smaller.