It's the Skovos Isles, one of the two Amazonian isles - it wasn't included in Diablo III, but the art was done as part of their actions to flesh out and clean up the lore surrounding the Diablo series.
Bashiok: It is Skovos, and I think this piece was something that Leonard showed and discussed at the WWI Lore and Environment Art panel.
It isn't a location that you'll visit in Diablo III, but the artwork is a good example of the work and thought going in to fleshing out the world of Sanctuary. It's already a very complex world with a lot of locations and events, but a lot of it still isn't visually or contextually realized. As we want to create the feeling of a world outside of your immediate view it's important to create or expand upon the locations and stories of that world.
As we're working to create Diablo III we're also working to create a more visually complete Sanctuary.