Why is Iceland an efficient connection point between London and Boston/NYC?
One of the benefits of having a stop halfway is that the aircraft can refuel. 

It therefor doesn't have to carry the fuel for the second half of the flight during the first half, which saves fuel. 

The uplift of fuel costs approximately 4% of its weight per hour of flight. That means the fuel you consume in the 4th hour of flight has burned approximately 11.5% of its original weight, just to carry itself. The fuel burned in the 7th hour of flight has burned 25% of its original weight , just to be carried for the previous 6 hours. (which means you have to load 133% of the fuel used in the 7th hour)

So a 10% detour in distance, with an extra stop, does not increase the total fuel consumption much. It may even reduce the total fuel consumption of the flight.

And it also means that the aircraft is lighter, so it is more efficient to use a smaller aircraft. Typically you see mostly Boeing 777, 747, 767 and Airbus A380 and A330 across the Atlantic, but if you look at the traffic in Keflavik, you'll note that most aircraft are B757 and A321. 

These aircraft perform well at mid-ranges, but on longer ranges they have to reduce their payload for fuel uptake for the long flight. For longer flights the bigger (and more expensive) aircraft are more efficient.

So the effect of the extra stop is that you reduce the fuel consumption, so that you can use smaller aircraft with lower fuel capacity which in turn means lower capital expenses. This makes the Iceland option economically attractive.