1. Vík and Kirkjubæjarklaustur

Two small villages are on the way along the east coast. One is 'Vík', where you have to go down to the beach and take a look at 'Reynisdrangar'. Be careful by the sea, the waves are very strong so look close after your kids.
Further is Kirkjubæjarklaustur with a very friendly atmosphere. It is nice stopping there and walking up to the hill the village is under. It is not far and you get a very nice view. You may also find a nice little waterfall, 'Systrafoss' on your way.