Iceland's geology is dominated by volcanic activity. Large eruptions of basalt lava may create deep flows of molten rock. As the rock slowly cools it shrinks slightly. The stresses cause jointing in several different planes, and columns of rock form with a generally hexagonal shape, like pencils. You can see this process more easily (as dont have to wait long time and risk your feets) when droughts come and mud dries. Cracks formed on the surface of mud are the same case as are these mighty organ pipes.