In fact 'island' is the more common meaning. I think it is a pedagogical error to introduce a new word with one of its arcane meanings. Back in the day my grade 9 Latin textbook started with the sentence: "Britannia est insula".
All of the textbooks I have encountered start with the 'insula' which has its literal meaning 'island' like 'Italia non est insula'. Textbooks love this word because they can use it to introduce the first declension. I don't understand why they introduce such a simple word with its less common but more complex meaning, as well as, promoting the rare locative case as the first lesson.
It was very common to refer to apartments as 'insulae' in Roman times.