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For me two of the main points it analyzes are:
1. Can a person without language and without God’s Words transferred to him, reason and still find Him? Answer, of course, is yes.
2. Comparison between surface level understanding of the God’s Word vs. its “real,” hidden meaning. The two people Hayy meets symbolizes the two: Salaman, the first (representing the Sunni followers of Shariah) and Absal, the second (the Sufi, follower of the Tasawwuf). Hayy himself represents the Philosopher, I.e. pure reason.
This dichotomy goes right to the heart of Islamic thought. Hayy, first tries to teach his understanding to the inhabitants of the island rules by Salaman but then sees the futility of it and leaves with Absal.
Too bad the English Wikipedia page gives such a limited summary of the plot.
Ibn Tufail based this novel on a story that was translated from Greek to Arabic by Hunayn Ibn Ishaq (https://en.m.wikipedia.org/wiki/Hunayn_ibn_Ishaq).
Powell was Don Barthelme's student, his analysis of Barthelme's main thrust here is worth the read alone. If you want to dig deeper on this point, here's another interview with him: https://www.vice.com/en/article/vdxyd8/padgett-powell-is-ame...
Flann O'Brian, mentioned briefly by Powell is an interesting character, too: https://en.wikipedia.org/wiki/Flann_O'Brien.