From Monkey Island wiki
The Vaycaylians are a merfolk-like species that resides at Spinner Cay in the Jerkbait Islands, though hundreds of years ago they tried living on land, on Flotsam Island. They left behind many ancient ruins which are still intact and functional.
They know a thousand different words for "wind" but none for "man" or "woman". Each Vaycaylian seems somewhat asexual, and Guybrush Threepwood can't distinguish between their genders. The Vaycaylians seem also to be attracted to people and might not have a sexual preference.
On Spinner Cay they run an onshore town and provide transit for humans by raft, for which a purchase of a day-pass is required. They also run a Bait and Repair Shop and have a library containing ancient knowledge, which after their return to the seas they sank. They also created the Summoning Artifacts used for summoning the ancient Sea Creatures that lead a person to La Esponja Grande.
The Vaycaylians make one more appearance as a part of Reginald Van Winslow's attack on LeChuck's ship in the final episode, but LeChuck easily freezes the attackers as a barrage of Vaycaylian tridents is flying through the air toward him. After his defeat the Vaycaylians are presumably freed along with Van Winslow.