What I think you're getting at - and one of the cool things about Iceland - is that the language hasn't changed all that much since it was introduced back then. This means that modern Icelanders can read the Sagas (written in the 10th and 11th centuries) with relative ease. The majority of people will read them in the same way we read Shakespeare or Dickens (with modern spelling and some footnotes), but with some effort they can be read by most well-educated Icelanders in their initial forms.
While isolation had a great deal to do with this initially, nowadays it's mostly because of the work of the Icelandic Language Institute, which religiously updates the language to add new words for concepts that didn't previously exist. They also work with the Icelandic Naming Committee, to maintain the list of acceptable first names that Icelandic children can be given - if the name you want to give your child isn't on the list of previously-used names, you have to submit it to the Committee to make sure that it is appropriate (i.e. can be spelled in the Icelandic alphabet and fits into Icelandic grammar).