This analogy is meant to help explain the different categories of Christian liturgy. So I want you, the reader, to imagine an island in the middle of the ocean, and then keep reading.
At the centre of this island is a tall mountain, so tall that, while it has tropical forest on its slopes, it actually has snow on the summit, from which trickle countless small streams. The mountain represents the sacrament of Eucharist, which Vatican II called the "source and summit" of our Catholic faith.
The streams join to form six rivers, flowing out from the mountain and spead out around it like the spokes of a wheel. These six rivers represent the sacraments of Baptism, Confirmation, Anointing of the Sick, Reconciliation, Holy Orders, and Marriage.
Jungle growth is all over the island, with the trees drawing their life-sustaining water from the streams and rivers. These trees produce various fruits, each according to their own kind. These trees (and their fruits) represent the various sacramentals, each of which is related to one or more of the sacraments in some way, and from which it draws its power (much as the trees draw water from the rivers and/or streams to produce their fruits).
I might add at this point that the rivers are more important than the trees to the inhabitants of the island, for the same reason that water is more important than food: you can go a long time without food, but only a few days without water. In a similar way, the seven sacraments are far more important than the sacramentals. That being said, though, we do also need the sacramentals as well, as a way to make the grace of the sacraments even more "nutritious" for us. This is why each liturgical celebration of a sacrament is actually a package of numerous sacramentals which either lead up to, or flow from, a core liturgical moment (such as, for the Eucharist, the consecration).
The island is wrapped by a fine sand beach, such that it is possible to walk around the entire island in a 24-hour period. One could start walking when the sun gets up, follow the sun in its course in the sky, be at the opposite side of the island when the sun goes down, and keep going through the night to meet the sun again as it rises the next day. This cycle of walking represent the liturgy of the hours, by which we sanctify the day through a gentle, peaceful form of prayer.
Finally, the island goes through its seasonal cycles year after year, which (of course) represents the liturgical year. Just as there is a "rainy season" (Christiams and Easter) in which water falls from heaven more abundantly (and builds up the snow pack on the mountain), there is also a "dry season" (Advent and Lent) in which the island depends on the water flowing from the mountain that much more. Each season is necessary, including even the "ordinary time" when it is neither particularly wet nor dry, although people live different rythms of life, including festival days, depending on the season in question.
Where is God? God is in the heavens, sending the rains and shining the light of the sun on the island. This represents the outpouring of his grace upon all of us, a grace which is communicated by the sacraments. Another interesting element of this analogy is that the closest we can get to "God in heaven" in this image is by climbing the mountain, i.e. through the celebration of the Eucharist! This is very true to Catholic theology.
What is the island itself? It is the Church. There are some who try and leave the island to go to other islands, and there is no question that God sends his sun and rain upon them as well. But without a similar mountain in the centre, they do not possess the rivers either, and their trees are much more susceptible to withering in drier seasons. It is the same with those who leave the Church for other ecclesial communities (or even other religions) which do not possess the Eucharist. Certainly God can act outside of the sacramental economy to bring his saving grace to people: He is not limited to acting solely over our precious island! But it is nevertheless his will that all live in unity upon this island, where life is sustained thanks to the means that he has established to communicate grace (the mountain and the six rivers, i.e. the seven sacraments).