Bone Village is a tiny little location on the northernmost continent. Rather than being a village in the true sense, Bone Village is mostly just a large dig site where archaeologists are excavating for various pieces of treasure and artifacts.
The story takes you to Bone Village after the completion of the events at the Temple of the Ancients and just before the team arrives at the Forgotten Capital. The objective is for you to dig up the Lunar Harp so that you can proceed through the Sleeping Forest.
More information can be found on the Bone Village walkthrough page.
Some of the items that you can dig up in Bone Village are listed below. Note that if you missed some of the items as you were going through the game you can pick them up here:
There is also a shop that contains a number of items including: