You can leave the airport and go to Reykjavik or Blue Lagoon.
It takes 40 min to drive to Reykjavik.
For information about stopover in Iceland you can check this Icelandair page and video
Yes. You can leave the airport. Iceland is part of the Schengen Area. Thus, as a British citizen you do not need a visa to visit Iceland. Just be back in time to get through security and border control (if flying outside Schengen) before your flight leaves. You’ll need to be back at the airport at least one hour before departure.
Update: When I originally wrote this answer, an hour was plenty of time for a passenger who already had a boarding pass to clear security and border control. Today, however, with the airport having become much more busy, you may need more than an hour if departing during peak travel hours. Especially during the summer months.
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