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Atlantis was a flourishing city in the Aegean sea, set up in advance of its time through Azal's discreet influence (The Time Monster). It is said to have been destroyed by the eruption of a volcano.
Although this story shows that some destruction was caused by Kronos, Azal also claimed responsibility (see The Daemons). This is said to be Kronos' second coming: presumably Azal unleashed it last time, although Kronos was contained before it destroyed the city. This time it does much more, creating the legend of the death of a civilisation, but stopping short of actually sinking the island.
It does, however, set in motion the tectonic disturbances which Professor Zaroff intends to exploit in The Underwater Menace, the story which features the much changed 20th century Atlantean civilisation and the final destruction of the place. The modern day volcanic action here reported is Atlantis' last gasp.