Sacrifices:
Iceland is one of the most expensive countries in Europe (last I checked, about on par with Monaco) and software engineer salaries in my experience generally -don't- reflect that.
Iceland is also (surprise!) an island, so getting anything shipped here is both slow and expensive. Ideally, learn to live without stuff you could normally get Amazon same-day shipping for in the states. Never mind the Icelandic postal service is a subject of constant derision for how bad it is at everything.
The weather is terrible (though mostly wind and rain - the temperature is kept mild by the Gulf Stream) for most of the year, with maybe a couple months of summer if a year is particularly lucky.
Employment options for a non-Icelandic-speaker are limited outside "immigrant jobs". This is a consideration both for your prospects as well as, if you're with someone, -their- job prospects. I do think this is slowly changing (slowly getting more high-tech companies that want to attract foreign talent), but at the same time UTL (the immigration directorate) has become tougher about foreign hires in the past few years.
Social life very much depends on your circumstance. It is very easy for a foreigner to fall into a pit of being totally alone because although everyone here speaks perfect English, virtually all social life is still conducted in Icelandic. And there aren't a ton of resources to learn Icelandic from (as opposed to, say, French, Spanish, or Italian). This can be mitigated to an extent both with work connections and local foreigner gatherings.
Dating is also dependent on circumstances. I'm a conservative-ish Christian looking for same and they (almost) don't exist in Iceland. But I have known more secular foreigners who have both met natives and other foreigners here, so it can work depending what you're looking for.
Icelanders are -very- laid back. This can be a pro or con depending on your temperament, but it took a little while for me to get used to. This applies both to time (expect that Icelanders are either late or decide last-minute not to show) as well as to expectations. The unofficial Icelandic motto is "Þetta reddast" which roughly translates to "Everything will work itself out". That sounds cool until you hear it coming from your plumber/electrician/doctor/contractor.
To that last point, I don't recommend Icelandic healthcare. Yes, it's covered by taxes so upfront costs are low, but Icelandic doctors in my experience (and that of other foreigners I've worked with, including European) are quite resistant to actually doing anything. I know a guy who had a serious condition that the Icelandic doctors refused to operate on despite every other doctor he got an opinion from outside Iceland recommending an operation. He was eventually able to push those recommendations through and get what he needed, but it was a lot harder than it should have been.
Living this far north, the seasons have a notable impact on mood and maybe even mental health for some. I've mitigated this somewhat with a sunlamp, but it's still a thing. "Fortunately" it affects everyone so empathy for it is easy to find.
Benefits:
I love that, as is my impression of the other Nordic countries, work is just work and people generally live to have lives. Icelanders are a very creative/artistic people. I know a bunch of musicians here as well as a couple authors.
Iceland is an extremely peaceful country. Both in the sense there's virtually no street crime (political corruption is another question, but at least that stays mostly out of sight) and in that there's no standing military (the closest thing is a coast guard). Also people tend to trust their government (there was none of the American gnashing of teeth over either masks or vaccines).
The landscape is world-famously beautiful. It's sort of surreal living in a global tourist destination.
Although I can't vote yet, I appreciate the parliamentary system over the US's two-party system, although this is far from unique to Iceland among European countries.
Citizenship requirements are pretty simple. Just stay here long enough and learn the basics of the language. Alternatively, marry a citizen. If you can somehow swing residence in Iceland, it can be a good gateway to European citizenship, which can open lots of other doors.
Not unique to Iceland either, but I do believe there's value to living as an immigrant. I've found it helped me grow in empathy towards immigrants in the US, plus it's liberating to realize that you're not necessarily stuck with one government just because you were born there if another one attracts you more.
I noticed my mental health improved considerably when I moved. Admittedly, I was uniquely bothered in Atlanta for purely Atlantan and not necessarily generally American reasons, but it's something I gained so I note it here.