Last year when we did our Ring Road tour, we spent the first night in a place called Þakgil, in the south. To reach it, you turn north at a turnoff just past Vík and drive inland for about half an hour. We had no idea it was that far, and were starting to think we were lost when suddenly we rounded a corner and a beautiful oasis appeared before us, far from civilization.
Þakgil is a verdant plane surrounded on nearly all sides by grassy slopes, which provides good shelter from the wind. There is also a large cave with communal barbecues out front and picnic tables inside, that is lit with candlelight in the evenings. You can camp on the site, or rent any number of small huts that are situated there.
Around midnight, Aldís [daughter] and I decided to take a walk. We hiked up a path between two hills, and within a couple of minutes reached this beautiful waterfall that appeared like a vision out of the semi-darkness. Aldís climbed up on a large boulder to take this picture, which I love because of the way the water appears out of the night like a white ribbon. It was completely magical.