The South Coast is a line of villages along Route 1, and the only real decision is how far east you push before you stop — because everything after Vík gets thinner and more expensive.
Hvolsvöllur — the western base
A district centre of about 2,000 people roughly halfway between Reykjavík and Vík: supermarket, pool, a campsite on Austurvegur, a well-regarded kitchen at Midgard and the LAVA Centre. Close enough to Seljalandsfoss and the Þórsmörk road to make them mornings rather than expeditions.
Vík — the middle, and the one that sells out
Iceland's southernmost village, 187 km from Reykjavík on Route 1, wedged between Mýrdalsjökull and the black sand and the only seaside village in the country with no harbour. Hotels, a brewpub, a pool on Mánabraut and the Katla Geopark visitor centre. It books out first and it prices accordingly.
Kirkjubæjarklaustur — the far end
A village of about 150 people in Skaftárhreppur, the last services before the sand plains: a hotel, a restaurant by Systrafoss, a campsite at Kirkjubær and a pool. Stay here if you are carrying on east to Skaftafell the next morning instead of doubling back west.
Practical: some famous names are not towns
Skógar is a village of roughly 25 people — a waterfall, a very good museum, a campsite and nothing else. Þakgil is 20 km up road 214 from Vík and summer-only. Sleep in Hvolsvöllur, Vík or Klaustur and visit the rest; booking a bed at a name off the map usually means booking a farm 15 km away.