Volcanoes, snow and untouched nature might come to your mind when thinking about Iceland. But the small island has definitely more to offer. Depending on its cultural heritage, the small volcanic piece of land involves a lot of Nordic folklore, whereas such ancient customs and traditions usually do not get a lot of attention in other European countries today.
The settlement of the country started with Norwegian emigrants hundreds of years ago, followed by other Scandinavians during the subsequent centuries. Today the island is still the most sparsely populated country in Europe, with a population of only 329,100 people, who are mainly descendants of those Germanic and Gaelic settlers.
Apart from mythology, Iceland gets more and more popular with tourists nowadays. They are probably most interested in the unique nature of the country. But some kind of “elf and ghost tourism” does exists as well. Visitors can attend guided tours, although it would be rather unlikely to meet real elves or trolls. Instead they get to know more about the culture and mythical background of the country.
When talking about Icelandic mythology you have to differentiate: On the one hand there is the old Norse mythology of Odin, Thor, and the other Nordic gods. This mythology consists of tales about various deities and heroes. They are probably not as well known today as, on the other hand, more typical fairytales featuring trolls, elves and ghosts. Especially Icelandic children tend to know more about those fairy creatures than about the ancient mythology of the country.
In Icelandic literature, we can still find many traditional sagas and eddas back from the High and Late Middle Ages, capturing stories about different mythical creatures assumed to be living on the island. Even today there are many modern books focusing on these Icelandic folk stories. Not because many Icelanders would really believe in those stories but just because they are interesting and entertaining to read, since they are part of Scandinavian folklore. Before proper civilization and electricity it was easy to “see” trolls in the mountains and elves coming out of stones. Ghosts were a fact to those traveling in the dark, sometimes for long distances. But today only a small fraction of people still really believe in those creatures. The younger generation grows up with these stories knowing that they are not real.