Mykonos became a tourist destination during the early 1960s, though some maintain that it was 'discovered' in the '50s. In any case, the island became a place visited by foreigners long before many other Cycladic islands. Though tourism is certainly the source of its prosperity in modern times, it also produces some manganese, barley, wine, and figs.
Also See the Mykonos Greek Islands Guide
Mykonos is known as an out and out party island, which it in fact is, during peak season. An immensely popular island, despite its extreme barrenness, it is, in fact, the most visited island in the Cyclades, and also the most expensive.
But it is hard to ruin such perfect light, and the sea there is still exceptionally clear. In Hora (main town), the Venetian houses in the Alefkandra (Little Venice) district still sit at the edge of the sea, having long attracted painters and photographers, and its thatched windmills its hundreds of churches and chapels have not gotten up and run away from the hordes.
Mykonos is one of the few places where scuba diving is legal in Greece, so that all the island's beaches now have diving centers for all levels of experience.
The stiff winds on the north coast has long attracted wind surfers, and gayness has long been accepted here, though the island is visited by people of all persuasions.
Though many of the good beaches do get packed in peak season, one can find some space on the large Panormos Bay on the north end, with its long sandy beach , sand dunes, and tavernas.
There are a couple of monasteries to visit on Mykonos, and the village of Ano Meria, which still keeps some of its traditional character , despite the inevitable incursions of mass tourism.
Visiting this island out of season, in May and June, or in September and October, one can enjoy it without the worst of the crowds.