The Blue Lagoon is Iceland's most recognizable tourist attraction. That fact does not diminish how utterly attractive it is. Last September I flew through Iceland on my way back from a golf week in Scotland. (it's actually a great way to go to Europe from the US). We had a layover in Iceland and we all took a bus to the Blue Lagoon. For a small fee they give you a towel (shorts if necessary) and you head through the locker rooms to a huge geothermal pool. The temperatures vary from 95 to 110 Fahrenheit depending on your location in the pool. There are hot spots and little mini-geysers and various "private" areas throughout the large complex. This was a Sunday and there were hundreds of Icelanders there, as well as a Danish rugby team heading home from the World Cup and a few dozen assorted tourists doing the same thing we were doing...soaking away a 5-hour layover!

Here's more information about The Blue Lagoon:

One of the most interesting and least expected sights in Iceland is the Blue Lagoon. Situated just minutes from the airport, with a name that evokes images of tropical waterfalls and lush greenery, this Blue Lagoon is something every visitor to Iceland must experience.

Situated in a lava field about 15 minutes from the international airport, the Blue Lagoon is a natural and manmade lake of geothermal springs and salt water, kept at a temperature just above 100 degrees (F) year round. Its healing powers are legendary – good for body and soul.
   
A stone-covered path to the lagoon is heated to keep it free of ice and snow on even the coldest winter day. After a brief stop in state-of the-art bathhouse facilities, you’re ready to relax in this natural hot tub. A heavy mist rises from the warm water, and as darkness approaches, dim lights lend an eerie glow to the surrounding lava rocks. Once refreshed, enjoy a gourmet meal in the café before returning to civilization.