We have employed spin-polarized scanning tunneling microscopy and Monte Carlo simulations to investigate the effect of lateral confinement onto the nano-Skyrmion lattice in Fe/Ir(111). We find a strong coupling of one diagonal of the square magnetic unit cell to the close-packed edges of Fe nanostructures. In triangular islands this coupling in combination with the mismatching symmetries of the islands and of the square nano-Skyrmion lattice leads to frustration and triple-domain states. In direct vicinity to ferromagnetic NiFe islands, the surrounding Skyrmion lattice forms additional domains. In this case a side of the square magnetic unit cell prefers a parallel orientation to the ferromagnetic edge. These experimental findings can be reproduced and explained by Monte Carlo simulations. Here, the single-domain state of a triangular island is lower in energy, but nevertheless multidomain states occur due to the combined effect of entropy and an intrinsic domain wall pinning arising from the skyrmionic character of the spin texture.