In spite of substantial territory, the population of the Hornafjörður area is only around 2400. Höfn is by far the largest settlement with around 2000 inhabitants. The rest of the population is spread along the very narrow patch of arable land between Vatnajökull and the Atlantic Ocean. Höfn's economical activities mainly revolve around fisheries, and the town is especially known for lobster which can be found in abundant quantities in the fishing areas surrounding the southeastern coast.

Despite its name which indicates a fjord, Hornafjörður itself is a very large lagoon with a blend of fresh and glacial water. The 40 square km lagoon is formed by interactions of the Atlantic Ocean and the Vatnajökull glacier, which by its constant movement produces clay and sand, carried by the glacier rivers and ending up as sediment in the lagoon. The lagoon is shallow, but nevertheless navigable by large ships and the town of Höfn the name means harbour is located at the first natural harbour on the south coast after Þorlákshöfn hundreds of kilometers to the west.

The area is dominated by large mountains and wide rivers, as well as the ever-present Vatnajökull glacier. All of this has combined to make the area one of the most remote in Iceland until the last few decades of the 20th century when roads were significantly improved.

Höfn and the Hornafjörður area, being on the Eastern coast of Iceland, are on the leeward side of prevailing winds. While it might be windy, less precipitation falls in this area making it part of the closest thing to being a low desert in Iceland the high desert being the area East of Mývatn.