Figure 1: Iceland in a global perspective, shaded area shows the Icelandic Basalt Plateau, red points the migration of the hot spot and orange lines are the rifts, both active and inactive.
Figure 2: Geological map of Iceland, showing the volcanic systems, volcanic zones and the division of the island into formations.
Above the plate boundary the spreading extends the crust resulting in the rupture of brittle crust and wide cracks and faults form, oriented perpendicular to the spreading directions (105°E and 285°W). The spreading also results in the formation of vertical dikes that can become pathways for magma to the surface. At the surface these rifts appear as swarms of linear volcanic fissures confined to 20-50 km (12-30 miles) wide belts named volcanic zones. The volcanic zones are then connected by large transform faults, known as fracture zones.
The magma production at these volcanic zones more than matches the plate movements and consequently the magma that emerges at the surface through volcanic activity accumulates in the volcanic zones, more so towards the centre than to the margins. Thus, the volcanic successions in the centre of the rifts are buried rapidly and follow a steep path when they move away from the spreading centre. The accumulation at the middle of the zones causes a downsagging of the crust, resulting in a gentle dipping of the successions formed at the margins (5-10°) towards the spreading axis. This tilt is preserved in the rock pile as it drifts out of the volcanic zones, explaining the regional dip of flanking older successions.
Due to it's tectonic setting volcanism is very pronounced in Iceland. The eruption rate during historical times (since 830) is an eruption every five years or so. The last eruption being in Grímsvötn in 2004. The volcanic zones are split up into volcanic system, typically represented by a central volcano and it's associated fissure swarms. Each volcanic system is characterized by conspicious tectonic architecture and distinct magma chemistry, each with the typical lifetime of 0,5-1,5 my. Altogether there are around 30 active volcanic systems in Iceland.
Traditionally the succession in Iceland is grouped into three major formations: the Tertiary Basalt (16-3.3 my), the Plio-Pleistocene (3.3-0.7 my) and the Upper Pleistocene Formation (<0,7 my).
The most conspicious landforms in Iceland are the result of repeated glaciation in the last 3 million years resulting e.g. in the gentle slopes of U-shaped valleys characterising the Tertiary formation in Iceland. Glaciers are still a prominent feature in the landscape of Iceland, covering a substantial part of the country. Many of the largest glaciers cover active volcanoes and the interaction between fire and ice is one of the fascinating aspects of Iceland. The higly explosive hydromagmantic eruptions have had an devestating impact on the settlements in Iceland, with extensive tephra fall and catastrophic floods called Jökulhlaups, caused by the melting of the glaciers.
Volcanic activity brings not only eruptions but also geothermal activity. Large high temperature geothermal areas in the volcanic systems can be utilized for the production of electricity and hot water for central heating and bathing. Low temperature geothermal areas are widespread outside the active volcanic zones and are used for central heating and filling the numerous swimming pools that are littered across Iceland.
From: http://www.soest.hawaii.edu/HIGP/Faculty/hey/rr2007/icelandgeo.html
Intro Geology Iceland
Iceland is one of the few places in the world where we can watch the Earth's growing processes 'in action' as increased magma productivity (connected to an hot spot or mantle plume) brings the growing joints of our planet, the oceanic spreading ridges, above the surface of the sea. Thus we can walk '20.000 leagues under the sea' with our feet dry, e.g. in the still active graben at Thingvellir national park.
Iceland is the youngest part of a much larger volcanic province named the Icelandic Basalt Plateau, reaching from Greenland to the British Isles, and covering about 350.000 km2 (ca 135.000 square miles). About 30% if this area (103.000 km2) is above sea level representing the island known as Iceland. Iceland is geologically very young, a infant in this world; it's rocks were formed within the past 25 million years and the oldest rocks exposed on the surface only 16 m.y. old and are at the westernmost tip of the country, the western coastline of Vestfirðir. The stratigraphical succession of Iceland spans two geological periods: Tertiary and Quaternary.
Iceland is located at the junction between the Reykjanes Ridge in the south and the Kolbeinsey Ridge in the north. These ridges represent submarine segments of the mid-ocean ridge closest to Iceland. The surface expression of the plate boundary in Iceland is the narrow belts of active faulting and volcanism extending from Reykjanes in the southwest and then zigzag across Iceland before plunging back into the Arctic Ocean of Öxarfjörður in the north.
Here is an interesting, interactive site about global plate tectonics: Motion of Tectonic Plates