"The fortress wall":
Being from such a sparsely populated country with a predominant car culture, Icelanders have never really learned the whole "fall back to single file" thing when approaching oncoming pedestrians on sidewalks. This is a great source of amusement and frustration to many expats living here, especially those who have lived in actual big cities with many tacit pedestrian norms.
So what happens is you get this group of people, at least two or more, who form what I call "the fortress wall" that take up the whole fucking sidewalk. And they do make direct eye contact with you (an Icelandic trait) so they KNOW you're there. But it's like playing Chicken. There is absolutely no effort by the wall to move over enough to allow you a human-sized passage.
You can do one of three things:
1. Go out of your way and walk in the street. You pussy.
2. Having moved over to the side, hoping that someone gets the point and does the same, just hold your ground and expect a blunt impact. Have you ever played the game Red Rover?
3. STOP. Just stop moving. Fiddle with your phone or whatever. But just stand there in the sidewalk. This interrupts the game of Chicken and really confuses people. You will watch as the others frantically try to rearrange themselves to walk around you. It's fun.
Note 1: I've found that loudly clearing the nose (as in covering one nostril and blowing really hard), coughing up phlegm or making other bodily noises will help break up a wall when jogging. And obviously, I try to avoid busy streets for such activities.
Note 2: Tourists are also guilty of forming walls, although they're usually staring off at buildings or maps so chances are they don't even notice you. They too are busy being Inspired by Iceland.
Strollers (Prams):
These are the size of Hummers in Iceland. I suppose they're gigantic because otherwise the Icelandic weather would rip them to shreds or blow them away Wizard of Oz style. A typical Icelandic stroller could probably be used to transport ten people in a developing country. (It is worth noting that an average Icelandic two-year-old is roughly the same size as a teenager in some parts of the world.)
Since half of the Icelandic population is under three years old (not sure, just made that up) you will undoubtedly meet several strollers on the sidewalk. Particularly on weekends, when pram-pushing mums often travel in packs of two to four, forming the dreaded "fortress wall", only more heavily fortified. Because the strollers are like megaliths, you will be reduced to options #1 or #3 above. For entertainment, watch as a group of strollers approach each other. Total mayhem.
Cars:
Yes, really. It's sadly common that I'm walking down a sidewalk and encounter a car (usually a huge jeep, of course) that is backing onto the sidewalk to park as I'm just steps away from impact. God forbid anyone should have to walk a few meters from a designated parking area. As Iceland is known for creative parking, you will just get used to having some type of vehicular obstacle to maneuver around.
Other obvious stuff:
Downtown Reykjavik has plenty of character, and this extends to the sidewalks. You'll see a lot of sunken stairways and window wells of cellar apartments and there is no city ordinance to enforce railings or covers for these so you've really got to watch your step, especially when you're stumbling home from the bars. (I wish I had a statistic for how many people fell into these.)
And in winter, some sidewalks have heated sections but otherwise the surfaces turn into an icy hell due to the constant snow-melt-freeze cycle. Since sidewalk salt doesn't do much good the city doesn't even bother applying it. (Elderly folks be damned!) So invest in some decent, albeit dorky, ice cleats or rubber traction out-soles that can snap on to the bottom of your shoes. They were big sellers this past winter.
Above all, use common sense. And be glad that Iceland is not a lawsuit-happy society.
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