No need to guess. There is almost a thousand year old story in Iceland which describes such a thing in Brennunjálssaga. The story goes something along the lines that they were discussing whether to adopt Christianity at the Parliament. but as they were debating somebody told them that a new eruption had started. Some assembly members wanted to blame this on the debate, that the gods were insulted that they were considering being abandoned, however others argued: “Then what angered the gods that produced the lave which we stand on now?”

In short, people kind of knew what was going on. They may not have known the exact mechanism, but they did know that this was how land formed, and was a normal part of nature, just like the northern lights, earthquakes and rain.