I may as well state at the outset that I do not believe there ever was any such place as "Atlantis," per se. There really is no archaeological or historical evidence proving its existence. The only real source of information about it comes from two of Plato's dialogs, Timaeus and Critias. While Plato is certainly a source for a lot of good information, the passages he cites are extremely thin "evidence" for the existence of Atlantis, and by themselves are not proof it existed. Unfortunately, these brief mentions in Plato's dialogs have become the core of a lot of speculation. Much of that speculation is based on erroneous assumptions about what Plato said about Atlantis.
Think about this. We know this story passed through many hands, even before Plato wrote it down, quoting Critias. Its veracity is in doubt, therefore, right from the start.
Of critical importance in these passages is the following (from Timaeus; the Egyptian priest is speaking to Solon the sage):
Now in this island of Atlantis there was a great and wonderful empire which had rule over the whole island and several others, and over parts of the continent, and, furthermore, the men of Atlantis had subjected the parts of Libya within the columns of Heracles as far as Egypt, and of Europe as far as Tyrrhenia. This vast power, gathered into one, endeavoured to subdue at a blow our country and yours and the whole of the region within the straits; and then, Solon, your country shone forth, in the excellence of her virtue and strength, among all mankind. She was pre-eminent in courage and military skill, and was the leader of the Hellenes. And when the rest fell off from her, being compelled to stand alone, after having undergone the very extremity of danger, she defeated and triumphed over the invaders, and preserved from slavery those who were not yet subjugated, and generously liberated all the rest of us who dwell within the pillars.
Note, the Egyptian priest is speaking of an "empire" which was contemporary with his own realm, just a few centuries before. He also claims that Athens halted the Atlanteans' conquest, even though the Greeks had only been in that region for a few centuries at that time. It's likely that the Egyptian priest is confusing the Athenians of his own time with the predecessors of the Greeks (Hellenes), the Mycenaean civilization.
Whichever is the case — note that this Atlantis is not a civilization which preceded that of Egypt. It was an empire contemporary with Egypt! Atlantis is commonly said to date back to 9,000 BCE — but clearly, such a great age is not indicated by this tale!
Also, take note of how Plato recounts the tale. He elaborated, within his dialog, on the number of "jumps" this story had to take, before it reached his ears. For him to include this detail within the dialog, tells us something — Plato is clearly implying that the story is hearsay, and only to be taken as such. He doesn't come right out and say it, but he definitely implies that he wasn't certain of its veracity.
Further, we have a great deal of documentation from ancient Greece, including a lot of actual historical narratives and annals (courtesy of people like Herodotus, & traveling sages like Solon who — unlike him — left journals behind of the knowledge they came across). But, significantly, the Atlantis story is found nowhere else! There is not one speck of other mention of Atlantis, in any other ancient Greek text. Nor have we ever found any Egyptian documents supporting what the Egyptian priest told Solon — & again, in the case of Egypt, we have extensive historical documentation.
If indeed there had been an Atlantis, which indeed had gone to war with Egypt and the predecessors of the Athenians, why have we not found any other mention of them? And even when we do find mention of Atlantis, why does the person chronicling the story — in this case Plato — make certain we know the hurdles it went through before he heard it?
Quite obviously, the veracity of Critias's tale, as related by Plato, is in doubt, right from the start. Still, there may be something to it, which we can find, if we decide not to take it at full face value.
This fits the tale pretty neatly. We know that Egypt periodically fought, and was conquered by, people known as "Hyksos" or "the Sea Peoples," who have — for a number of reasons — been identified as possibly being Minoans. Additionally, the Minoan civilization were indeed rivals of the Mycenaean civilization of the Grecian mainland. Lastly, we know that the Minoans reached as far as Tyrrhenia (the ancient Greek name for Etruria, or the land of the Etruscans, in northwestern Italy).
We also know, from the historical record, about when the Thera disaster occurred, and there is archaeological evidence — on that island & several others — of a civilization there which was wiped out by the explosion of Thera. (Just as we can see the wreckage of Pompeii & the nearby town of Herculaneum, buried under ash & mud spewed by Mt. Vesuvius erupting.) While the name "Atlantis" is missing from these known historical accounts & from the archaeological evidence, the story — in almost every other way — matches this scenario.
The only point on which this theory and the passages in Plato's dialogs differ, is the location of Atlantis itself. The dialogs place it in the Atlantic Ocean, while the Minoan culture was in the Aegean Sea. However, neither the Greeks nor the Egyptians had a very good idea of the geography of the western Mediterranean Sea. Moreover, the meaning of the term "the Pillars of Hercules" is in some doubt. Sometimes, in ancient Greek literature, this phrase refers to the strait between Sicily and the southern tip of Italy (a place which the Greeks did know well, having established colonies in Sicily and southern Italy). Furthermore, some ancient maps & texts mark the region past this point "the Atlantic Ocean" & even state that Tyrrhenia is in the Atlantic!
It doesn't take a stretch of imagination to see that the placement of Atlantis in the Atlantic Ocean could very well have been in error, based on the ancients' distorted geography.
In ancient times, the "parable technique" was often used to make a point. That is, a fictional tale was told which illustrates some point. A great deal of ancient literature — from many European and Near Eastern cultures — was fiction, and was designed to be so, from the start. We cannot take every ancient tale and assume it to be absolutely historical. To do so is simply foolish.
In this case, the context of the dialogs tells us that Critias might be using a parable. The discussion is ideal societies, how they come into existence, and what happens to them. Note, I am not saying that Critias made up the story just to make a point. I am saying that just because he cited it, doesn't mean it's true. It may very well have been — to him — a genuine tale his grandfather told him, to make the same point.
Generally, Atlantis was taken to be a decadent, antedeluvian nation, and its destruction, as Plato's tale described it, resulted from the Great Flood (which was survived only by Noah & his family). A few suggested that the Atlanteans were the "Nephilim" mentioned in the Old Testament (this Hebrew term has been variously translated as "giants" or "fallen people"). This was the extent of medieval thought about the Atlantis myth.
Refugees from Atlantis, they go on, managed to reach the shores of Africa, the Americas, and even the Pacific. They kept alive as much of their knowledge as they could. This accounts for the aforementioned coincidental similarities among diverse cultures.
Mainly, such tales suggest that we are now doing the same thing. We are destroying the earth in the same way the Atlanteans did, and now invite another calamity such as what destroyed that lost civilization. They are supposedly an object lesson in avarice, greed, environmental destruction, and carelessness.
Note, however, that none of this is in any way suggested by Plato's passages about Atlantis. Much of this information was actually inspired by the so-called "sleeping prophet," Edgar Cayce, who claimed that the Atlanteans had this sort of advanced technology; in his prophetic dreams, he literally went back in time, and learned about them.
This view of an "enlightened" people who went astray, however, is completely contradicted by Plato (see preceding quote from Timaeus). Plato's Atlantis is an arrogant, militant nation of ruthless conquerors, who subdued and enslaved whole nations, and who were halted only by the scrappy Athenians (or their predecessors). If the Atlanteans were so enlightened, why would they wage warfare over so large a scale? If they were so technologically advanced, how could the primitive peoples of prehistoric Greece have defeated them so handily?
Furthermore, if one accepts this notion, then there are other apparent, inherent contradictions. The "refugee" Atlantean survivors apparently totally abandoned their "advanced" technology, leaving not a trace of it behind — so apparently, they simply blended in with the neolithic cultures among whom they took refuge. Yet, thousands of years & many generations later, they were able to inspire, direct & execute the construction of pyramids. Huh? This makes no sense at all!
Some New Agers have come up with even newer and more fanciful twists on the Atlantis tale. They say that Atlantis was not a human civilization, but one of alien visitors. Inspired by the likes of Erich von Däniken, Immanuel Velikovsky, & Zecharia Sitchin, they claim that Atlantis was either an alien colony on Earth, or perhaps, a human culture to whom the aliens had given a great deal of knowledge. These fables are so ridiculous as not to merit any further comment.
Lastly, many New Age speculations claim that Atlantis was itself a successor civilization — just as ours is the successor to theirs — which was in the Pacific Ocean, in a land named Mu or Lemuria (depending upon whom you ask). Some say that it was Mu or Lemuria which was either peopled or inspired by alien visitors, and that Atlantis was a human civilization which survived it. Again, we are delving here into the depths of ridiculousness, and need not proceed any further.
The point is that this latest wave of fluff-and-nonsense about Atlantis has little or no basis in the passages from Plato — in spite of the fact that the Plato passages are cited as "proof" that Atlantis existed — and are pure, unadulterated fantasy.
The only realistic explanation for this passage, as far as we can tell at the moment, is that it refers to the Minoan civilization of the Aegean Sea. Anything else is just wild speculation based on erroneous assumptions. Period.