@Hiroy:
I interpreted the tree thing as "needing magic to fight for your life" rather than "without the tree, we can die". Especially considering that the tree is in essence an unlimited supply of magic power that works exclusively for FT members on the island.
But it definitely says tree is protecting them from losing their lives.
http://www.mangareader.net/fairy-tail/235/17
Whether that's by the magic enhancement the tree is affording them, by some divine protection, or both (one in the same) if that tree stays up they basically cannot die on that island. Without the tree they can die, but with it they can't.
@Crossword:
It's that big tree on the island, and apparently it only works on the island. One of this arc's minibosses demonstrated earlier that that effect ceases to work if it's damaged, knocked over, or otherwise damaged, though.
@Silence:
The tree was brought back at the last minute of the last battle by Urtear, so supposedly its effects have returned.
Lucy's narrating that the black dragon is going to destroy Tenrou Island though, so if Makarov's on the isle when the tree goes down (again, lol), it won't protect him.
And yes, the whole thing was REMARKABLY stupid.
Let's say the tree does go down again. We all know it can be damaged, controled, and/or taken down completely neutralizing all of its affects. What will become of the guild then? Look at what happened when the tree fell the first time.
! Once the Tenrou Tree was down so was every FT member embedded with the FT crest. Doesn't this mean their powers are solely supplied by the Tenrou Tree? The only reason they could continue fighting after the Tenrou Tree was down was because Azuma gave them their magical powers back (the lot he drained). It wasn't until the Tenrou Tree was revived that they truly got their powers back (and this was after Azuma was dead so it's not like he was still draining their powers).
! So anyway, back to original question what do you all think would happen to the FT members powers if the entire island was destroyed and the tree along with it? Obviosuly, the FT members had magic before they joined the guild but from the looks of it their magic is soley dependent on the state of the Tenrou Tree now that they have the FT crest on. Obviously, they could have worn out their original magic and just been running on the extra magic the tree provided but that doesn't explain them saying "their magic power is gone" when the Tenrou Tree was downed. All of their magic power seems to be tied in with the Tenrou Tree now.
And wouldn't it be redundant if Ultear had to revive the tree again after just doing it a few chapters ago?
Lastly, them being affected in this way by the tree could just be their proximity to it but that would just mean all they have to do is leave the destroyed island and…their magic powers return? That would mean for some reason when they got on the island all their powers were somehow tied to the Tenrou Tree, for better or for worse, because it's really important and all that. Though, all they have to do is leave the destroyed island and their powers won't be affected in the slightest (even if the tree is destroyed) and, voila, the tree isn't really so important anymore if it really has no connection to you if you're too far away. It was just there as a really important historical landmark in FT's history. All this time the power was inside them and now with the tree's destruction they realize their true strength. You know what? Sounds like Fairy Tail actually. Doesn't make much sense but whatever.