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Australia is the smallest known continent, located between the Pacific and Indian Oceans.
After rebuilding his Kansas farm following a devastating cyclone, Henry Gale took a trip to Australia with his niece Dorothy to visit some cousins and have a good rest. During the voyage, a terrible storm washed Dorothy overboard and she soon found herself landing on the shores of the Land of Ev.
The country/island/continent of Australia is sometimes called Oz because the stereotypical Aussie (or "Ozzy") accent renders it "Oztralia". It is unknown whether L. Frank Baum named his Fairyland with Australia in mind.