The Caribbean Sea is a large body of salt water located in the Western Hemisphere. Within the Wizarding World, it is known primarily as a habitat for a specific subspecies of Merpeople. Unlike the merfolk found in the colder waters of the Great Lake at Hogwarts, the mermaids of the Caribbean Sea are noted for their great beauty, conforming closely to the idealized images often depicted in Muggle folklore and art. The textbook Fantastic Beasts and Where to Find Them explains that the appearance of Merpeople varies greatly across the globe, and that the beautiful, siren-like variety is typically found in warmer waters. The Caribbean Sea is one such location explicitly identified as a home for these mermaids (Pottermore).
The Caribbean Sea does not feature as a direct setting in the original novels, but its existence serves as important world-building information. It provides a canonical explanation for the different types of Merpeople and helps to contextualize the appearance of the merfolk encountered by Harry Potter. During the Triwizard Tournament, Harry Potter faced Merpeople in the Great Lake for the Second Task. These creatures had greyish skin, wild green hair, and yellow eyes and teeth, a stark contrast to the beautiful mermaids of popular legend. The knowledge that different, more aesthetically pleasing mermaids exist in places like the Caribbean Sea explains this discrepancy and highlights the biological diversity of magical creatures based on their native environment.
There are no specific wizarding settlements or locations within the Caribbean Sea that are mentioned in the canon.