When I saw the title of this thread, I could guess that most responses were going to be to day hike to areas outside the immediate Thousand Island Lake basin and that is of course the case. Why bother to visit a lake with World Class views that is arguably one of the most spectacular and beautiful in the West, plan for a layover day there, and then during the layover day spend all the time elsewhere?
The first thing to understand is that the views across the lake towards Banner and Ritter are going to be much more aesthetic during morning hours versus the afternoon when those big peaks are relatively boringly backlit. The earlier in the morning to start a hike, the BETTER. The second thing is most visitors to the lake camp above the northeast end of the lake because the JMT/PCT passes by there, views are fine, and there is a quarter mile no camping zone around the outlet. The third thing is the lake is large and the obvious of simply hiking around it is the best idea.
A hike around the lake will take several hours so is not trivial. There is a use trail, and there is much to see especially at the west end of the lake where there are other small no name lakes and ponds that by mid to late July are often carpeted in flowers because that end of the lake gets the most lingering snow melt coming off from Banner. Now the gentle turfy north side of the lake is generally more aesthetic than the south side so one ought circle the lake counterclockwise. If one is up for a bit more effort and can handle easy glaciated landscape crosscountry, at the southwest end of the lake, climb to the well used pass south and instead of dropping down into the Garnet Lake basin, follow east along the top of the gentle ridge separating the two basins where one will also have fine views of both Garnet Lake and Thousand Island. One thing of note is the geology in the basin is interesting colorful metamorphics that changes as one moves to different areas. About two-thirds of the way along angle back down towards the Thousand Island Lake outlet.
So what is worthwhile scenically in the afternoon? Views eastward will have the better light. An easier shorter hiking idea here is to take the JMT south and visit two little jewels, Emerald Lake and Ruby Lake. Little Emerald amid a greenish geology is a complex shaped lake with a number of bays and also often has good rainbow trout fishing. Ruby Lake with its rusty reddish geology backdrop amid big red firs is simply wonderfully cosy and another world versus the open feel just north. Great place to escape to on a breezy afternoon. If one is comfortable instead of taking the trail back, at the Ruby outlet climb up and along the minor dome rimming the brink of the San Joaquin River canyon and follow that north around Emerald. Fine views down into, across the canyon towards Two Teats, Mammoth Mountain etc.