The proper name of Iceland is "Ísland". Today, "ís" is most commonly used to mean "ice cream" (go into a restaurant and order ís, see what you get). Hence, the country name means "Land of Ice Cream"
In the old days it was just "ice", and it still means that also (technically "ís" in the context of ice cream is short for "rjómaís", or "cream ice"). But nowadays it's most commonly used just to mean ice cream; if you want a glass of ice, you need to ask for "klaki". Indeed, sometimes people jokingly refer to Iceland as "klakinn", or "the ice". "Ég er á klakanum" -> "I'm on the ice" - > "I'm in Iceland".
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