When I first saw this word, I didn’t think it was a compound. But actually it breaks off into “sól” meaning “sun” and “ey” meaning “island.” If you look at a buttercup you can definitely see the resemblance of a “sun island” among the green leaves beneath it.
To push the idea of a sun Island even further, you have to look towards the meadow buttercup, called a “brennisóley.” If you read a previous word of the day in which I explained the alcoholic beverage Brennivín, then you know that “brenna” means “burning.” Burning sun island. These flowers in Iceland are largely yellow with a little orange added into them, inducing the idea of flames.
There is also a musician in Iceland named Sóley Stefánsdóttir, who just goes by “Sóley” in her work and sings mainly in English. There is a mournful type of beauty in how she sings, and I’d imagine sitting in a field of buttercups while listening to her music would be rather nice.