I believe in Iceland’s case it has to do with how the Icelandic language works and certain names just kind of don’t work with the rest of the language. I’m far from an expert on the Icelandic language, but my understanding is that nouns, names included, sort of get “conjugated” (I’m not sure if “conjugation” is the correct term, I think that’s specifically a vowel thing, but it’s similar in that the word changes depending on how it’s used in a sentence and most of us are familiar with the concept of conjugation.)

There’s a few random things in English that do it, like depending on the sentence, you might use I/me/my/mine/etc. when you refer to yourself refer to yourself, but in icelandic all nouns do that in a regular predictable way, so they have to be pronounceable with certain suffixes tacked onto them.

I think they also do the old school patronymic/matronymic name thing instead of family names. So if you meet someone in Iceland whose name is something like “Steve Robertson” then “Robertson” isn’t his family name, his dad is literally named “Robert” and so he is “Steve, Robert’s Son” so names kind of have to work with that kind of naming convention as well.

So it’s less of a “this name is stupid” and more of a “this name breaks our language”

It also seems like they’ve eased up on some of the rules in recent years, first names are no longer gender restricted, and they’ve added a nonbinary suffix for the patronyms/matronyms so now you can be a -bur instead of just -son or -dóttir