Selfoss is rarely seen as a tourist destination in its own right. Although it sits by a beautiful spot by the Ölfusá river, it's simply too close to places like Þingvellir and Gullfoss and Geysir to be noticed, and too close to Reykjavík for most people to think of it as a place to stay the night.
The town is young, even by Icelandic standards. Its history starts out of nothing in the early 20th century, when a new bridge was built across Ölfusá. When several important companies were placed close to the bridge (it made sense, economically) the town grew into an important hub for the agricultural area that surrounds it and today it produces most of the dairy products consumed in South, West and Southwest Iceland. 
Culturally, Selfoss is in Iceland connected to what could be called the Icelandic equivilent of the British chav. The Icelandic word is hnakki, which means the back of the neck. There is definitely some truth in this, and Selfoss has been home to some of the most iconic bands identified with hnakki-music. But there is much more to the town, and it is maybe unfairly judged. Being the largest town in South Iceland (with a population just under 7,000) and the main hub of an important agricultural area, it also plays an important role in the wider regional culture. Selfoss remains an undiscovered destination and its main appeal really lies in the surrounding areas, but it's a friendly enough town and can be a nice place to stay.
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