Complex sentence: In addition, there is a crater lake on Volcano Island, which is in Lake Taal, which in turn is on Luzon (an island), making that crater lake the largest lake on an island in a lake on an island.
Split into simpler sentences: In addition, there is a crater lake on Volcano Island, which is in Lake Taal, which in turn is on Luzon (an island). That crater lake is the world's largest lake on an island in a lake on an island.