Bæjarfoss
The waterfall Bæjarfoss (pronounced “bye-yar-foss”) is within walking distance from town. It's an easy hike on a somewhat hidden path—walk toward the back of town from Hotel Ólafsvík. You can also pick up the trail at the edge of town, but you will have to scramble over some fenced areas. The waterfall is small but incredibly scenic, and you won't find the crowds that you will at some of Iceland's larger falls.