Iceland can be rather large or small depending on your perception of it. The way maps are projected can distort its size. Kentucky is only slightly larger than Iceland for instance, but with a population density 13x that of the island. With the small population, the whole place just seems much larger.
Over 1/3rd of the population of Iceland call its capital city of Reykjavik home, and if you include the Capital Region as a whole, you've got over 60% of the population living in just over 1% of the size of the country. With that kind of urban density, the rest of the island is suddenly even more sparsely populated.
I really wish I had time to explore Reykjavik, but realistically I just had a few meals and didn't do any sightseeing as I was either working or touring outside of the city. One week in Iceland is enough time to take in the major sights in the West and South, especially if you're on a true vacation and not just working remotely like I was. If you really want to see the country though, I'd recommend a minimum of two weeks so that you can either explore the parts in depth you're interested in, or do a drive around the ring road. 3-4 weeks, and now you're talking about really seeing Iceland as it deserves to be seen. Well, I only spent a week, so I guess that means I have to keep returning till I see it all, right?
This view of Reykjavík was taken from Perlan. I ate a rather expensive below-average dinner where I can only assume my money was spent more for the view inside a rotating restaurant than for the food itself. Food in Iceland can be fairly expensive, but it can also be quite delicious - just not at Perlan. The ginormous Lutheran church Hallgrímskirkja dominates the skyline. Its design is meant to resemble the basalt lava flows you can find around the island.