Laugarvallalaug, also sometime called Laugarvellir is the queen among Icelandic geothermal pools. Situated in a beautiful natural surrounding, it is not only a geothermal pool or river, but a geothermal waterfall. If you make it here, this place will stay with you forever.
This is exactly how you imagined Iceland to be.

Laugarvellir geothermal pool and waterfall is located 100 kilometers (65 miles) SW of Egilsstaðir. Accessibility really depends on the time of year you are coming and with what kind of a vehicle.

2WD and / or Winter: you can (usually) easily make it to the Kárahnjúkar dam. From there, you have to walk for about 10 kilometers. There is a small river to cross at the end.
4WD and / or Summer: after you pass Kárahnjúkar dam, you can continue on the F road to this small parking lot (GPS: 64.989767, -15.772241). From there, you have to walk for approx. 3 km. There is a river to cross at the end.
GPS coordinates of Laugarvellir Geothermal pools : 65.005962, -15.761317 Take me there!

Photos of the Laugarvellir geothermal waterfall: