A landslide lake, it was formed on 8 October 1720 by the Bjarnastaðaskríða [is] – the 'Bjarni rockslide,' so named because it destroyed the Bjarnastaðir farm – when skree (skríða) and other debris falling from the Vatnsdalsfjall caused the Vatnsdalsá to be dammed and flood the grassy wetland that was previously found there.

[2] Records describe three ponds in the area immediately prior to the formation of Flóðið – called Hólatjörn, Körtjörn, and Breiðabólstaðartjörn – which were submerged in the flood and absorbed into the newly created lake.

[5][6] There are three landforms said to be "innumerable" or "uncountable" in Icelandic proverb: the lakes of the Tvídægra and/or Arnarvatnsheiði moors,[note 1] the islands of Breiðafjörður bay, and the Vatnsdalshólar hillocks.

Several major landslides have occurred since the area was settled, including the Skíðastaðaskriða in 1545, in which fourteen people were killed, and the Bjarnastaðaskríða in 1720, which caused the formation of the Flóðið.

Ingimundr the Old (c. 865 – c. 935) is the principal character of the saga, which describes his youth in Norway and time spent as a viking fighting alongside King Harald Fairhair, including in the Battle of Hafrsfjord.

At a Midwinter feast hosted by King Harald, a Sámi seeress called Heiður völva foretold that Ingimundr would settle in Iceland.

Though the original trees are no longer present, a small grove was planted and named Þórdísarlundur in her honor; it stands at the southern edge of the Vatnsdalshólar along with a memorial stone commemorating the birthplace.

Sentenced to death for the 14 March 1828 murder of Natan Ketilsson and Pétur Jónsson, Friðrik Sigurðsson and Agnes Magnúsdóttir were executed by beheading.

[1] The execution has been the subjects of several creative works, including the novel Yfirvaldið ('The Authority') by Þorgeir Þorgeirsson, published in Icelandic in 1973, and the 1996 film Agnes, directed by Egill Eðvarðsson.

Australian author Hannah Kent wrote the internationally successful novel Burial Rites, a fictionalized account of the last year of Agnes’ life as she awaited execution.