The sailors fear Ship-Trap Island, the place where, unknown to them, Zaroff has been hunting humans.
In a way, the sailors and their fears may represent the complex balance between instinctive, animalistic traits, and higher-order thinking and reasoning, that are shown in the ranges of human behaviors. Zaroff complains that his human prey often loses its ability to think and reason because of the stakes at hand, and that he's getting tired of hunting people who turn out to be little better than animals. The sailors are clearly human, but their fear of the island is irrational, and suggests that, as Zaroff says later, we are all animals underneath the veneer of our humanity.
This duality is supported and elaborated upon by the conversation between Rainsford and Whitney, calling the sailors both fearful and superstitious, but also perhaps possessing of some instinct which is sensitive to the presence of evil. It is telling that Whitney is the one who shares that he, too, felt a sense of dread, while Rainsford did not, suggesting that Rainsford is not in touch with this instinctive side of himself.
Overall, the sailor's fear and this conversation foreshadow that there is evil on the island, and that it will somehow reflect upon the metaphorical battle between savagery and civilization.