Heligoland is a tiny island in the
North Sea off the coast of
Germany, to which it now belongs. It was British between 1814 and 1890, under the English name
Heligoland, whereas the modern German name is
Helgoland without the I.
The bay forming the angle between Lower Saxony and Schleswig-Holstein, and into which the Rivers Elbe and Weser flow, is called the Bay of Helgoland, or Heligoland Bight. The East Frisian Islands and North Frisian Islands lie off the coasts of these two Länder respectively, but Heligoland is not part of either group, but lies somewhat further off the coast, perhaps 50 km from the mainland. As it commands the entrances to the rivers on which Hamburg and Bremen sit, it is for its size disproportionately important as a fortress. The local dialect is said to be significantly different from other Frisian dialects.
In heathen times the Angles and Frisians went on pilgrimage to the island, where the groves contained temples to Forseti and Herta. The Northumbrian missionary St Willibrord failed in a mission to convert the heathens around 690, and the Temple of Forseti was supposedly destroyed by force on the orders of Bishop Ludger of Münster (d. 809). The meaning of the name is uncertain, but the resemblance to heilig 'holy' and the existence of Holy Island off the coast of England are suggestive.
It was really a single island until 1720 when the sea cut it in two, forming a small secondary islet called Dunen-Insel to the east, a mere sandbank compared to the great cliffs of the main isle.
When the island became British in 1814, Britain had for a hundred years been united in a personal union with the neighbouring German state of Hanover, which was elevated from electorate to kingdom in that year. Under the Salic Law used in Hanover the throne could not go to a female, so when Victoria inherited the British throne in 1837 the two kingdoms went their separate ways, a cousin becoming King George V of Hanover. However, Heligoland had a special status, and remained British. It had actually been Danish before that, since the kings of Denmark vied for the duchy of Schleswig-Holstein, and it was seized by Britain in 1807 in the confusion of the Napoleonic Wars; the conquest was made legal with the peace treaties of 1814.
In 1890 it was traded for an agreement with Germany on colonial demarcations in Africa (read: mad land-grab on all sides). Britain had a protectorate over Zanzibar, an island group lying off the coast of the colony of German East Africa (later Tanganyika after Germany lost it to Britain in the First World War). Germany agreed not to seek influence over Zanzibar or some inland territories Britain was staking protectorates over (Uganda and the Sultanate of Witu on what's now the Kenyan coast). It's been said that this cession was the only voluntary loss of territory the British Empire ever suffered until it began dismantling the empire from 1947 on.*
In the opening month of the First World War a significant naval battle took place in the Heligoland Bight, with British submarines, destroyers, and cruisers suffering no losses and light casualties inflicting severe damage on the Germans: the cruisers Mainz, Ariadne, and Cöln sunk and 1200 killed.
After the Second World War the fortifications were destroyed. Former local inhabitants campaigned to be allowed to return to the island in 1951, and it was peacefully reincorporated into West Germany on 1 March 1952. It still has a peculiar legal status: for some purposes (VAT and customs) the island of Helgoland is outside the European Union.
The local flag of Heligoland was a horizontal tricolor of green, red, and white, and this was also flown with the Union Jack as a canton. The colours are said to derive from the red cliffs above a white beach leading to a green upland, as in the dialect rhyme Grün is dat Land, Rood is de Kant, Witt is de Sand, Dat is de Flagg vunt hillige Land.
some of the history from: Everyman's Dictionary of Dates
more, including the Heligoland Treaty: http://africanhistory.about.com/cs/eracolonialism/a/Heligoland.htm
more from the 1911 encyclopaedia: http://95.1911encyclopedia.org/H/HE/HELIGOLAND.htm
Battle of Heligoland Bight (very comprehensive): http://www.worldwar1.co.uk/heligoland-bight.html
flags: FOTW mirrors, e.g. http://www.fotw.net/flags/de-hg_gb.html
* I'm not sure how voluntary the loss of the Mosquito Coast to Nicaragua was -- I can't think of any other diminutions of the Empire