The "lakes" you're talking about are holes. As for the coastlines, they've been shaped by runoff water for millions of years. The landmasses were nearly solid rock when they first cooled and over those millions of years, they were eroded to their current look. The undersides are very mountainous and rocky.
The skylands were created when a planet-sized comet smashed into a trojan planet orbiting a massive gas giant. The comet and the planet fused into the shards and in the process, an alloy called aetherium was formed. The aetherium was charged by energetic particles that gives them their boundless energy to distort gravity.
When aetherium is forged, it loses that energy and must be charged by other means. The Imperial Order of Magi found such a way and created an arms race between kingdoms thousands of years ago. The skyships and the terrible weapons they boasted led to an age of warfare unseen since.
The empire fell, as all empires are wont to do, when every single Magi vanished. At the same time, the world was Veiled from the Heavens. Only Valkyrie and her seven daughters are visible in the night time sky. The world has become a very dark and dangerous place.
