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Panarea was one of the first inhabited Eolian islands and also one of the oldest from a geological point of view.
The Milazzese plateau has been found to be the oldest settlement of the middle neolithic period (3750-3500 b.c).
Even if it is the smallest of the Eolian islands (3.4 kilometres square) it is the most densely populated (320 permanent residents).
The island is divided into three disticts: S.Pietro, Iditella and Drautto.

S. Pietro, where the port is situated, is also the centre of life on Panarea. The majority of the hotels and restaurants are here as are boutiques and craft shops.
S.Pietro is also the place for lively nightlife, from midnight to the morning. It also has a fair share of holidaymakers who come from the other islands on the archipelago.

Iditella is situated in the northern part of the island and populated by the majority of permanent residents. It offers breathtaking views and a wonderful little beach, dominated by Calcara from where natural volcanic forms can be seen in the shape of fumeroles.
The overlooking Calcara ridge is the ideal place to admire the spectacle that the volcano of Stromboli offers. At night it is possible to see and take photographs of the eruptions, which happen every 30-45 minutes.

Drautto, which derives from the name of the moslem pirate Drauth, is found in the southern part of Panarea.
Beyond offering a splendid beach (Zimmari is the only sandy beach on the island and where "caretta caretta" turtles once used to come to lay eggs) and the remains of a prehistoric village (on the Milazzese plateau), at Drautto is what many consider to be the most beautiful bay of all the Eolian islands: Cala Junco.
Cala Junco is set out in a way in which from the outside it isn't possible to see inside and this made it one of the favourite places of Drauth to carry out his raids.
Around Panarea are a series of islets, the dimensions of which confused the first visitors as to the number of Eolian islands, for example Baziluzzo (more than half a kilometre square), Bottaro, Liscia Bianca and Dattilo.