Overcoat covering Sally on island in August (8)
I believe the answer is:
majestic
'august' is the definition.
(thesaurus)
'overcoat covering sally on island' is the wordplay.
'overcoat' becomes 'mac' (mac is a kind of overcoat).
'covering' means one lot of letters goes inside another.
'sally' becomes 'jest' (I've seen this before**).
'on' means one lot of letters go next to another.
'island' becomes 'i'.
'jest'+'i'='jesti'
'mac' enclosing 'jesti' is 'MAJESTIC'.
'in' acts as a link.
(Other definitions for majestic that I've seen before include "Stately; sublime" , "Regal - stately" , "Regal - grand" , "Grand, impressive" , "Regal, imperial" .)