When answering geography-based GK questions:
\begin{itemize}
\item Rely on officially recorded statistics,
\item Avoid assumptions based only on country size,
\item Remember unique geographical records.
\end{itemize}
Step 1: Several countries have a large number of islands, including Indonesia, Norway, and the Philippines.
Step 2: Sweden has been officially recorded to have the highest number of islands in the world.
Step 3: The total number of islands in Sweden is estimated to be more than 260,000, which is higher than any other country.
Step 4: Hence, the correct answer is Sweden.