The blacksmith island is a small island containing the Blacksmiths house, and the Blacksmith NPC.
The Blacksmith can upgrade your swords/guns/devil fruits to be able to do more damage, by the use of gems.
Each time you upgrade your swords/guns/devil fruits, the amount of gems you have to pay by increases.
The chance for your weapon to be upgraded is different every time per how many times you upgraded.