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Yeah, it’s a bit complicated. But you definitely got the gist of it. We’re historically and culturally pretty closely connected to Scandinavia and partly on the Scandinavian peninsula, but only a small minority speaks Swedish, most speak Finnish which is separate from Scandinavian languages. (And well, separate from most of Europe, really.) Though culturally it’s a bit harder to say how close or separate we are to Scandinavian countries. I’d say we’re pretty close, but some might have a differing opinion.
And yeah, “Scandinavia” is often used to mean “Nordic countries”. And it isn’t really a huge deal to call us or Icelanders Scandinavian. I just like to point it out, probably a little needlessly. But that’s just how I roll.