That's because Icelandic is special mate. Faroese might be the closest there is to Icelandic, but that's not the same as saying that farouese can't be the closest to danihs. One doesn't exclude the other.
Also my GF is from the faroe islands and i've been there with her couple of times. I understand most of it without having practiced/studiet it :)
Most of those people are polish and if they dont talk Icelandic they probably dont talk English and only moved here to get jobs. But most of the population talks Icelandic and locals do speak Icelandic. And trust me when I say that none of the Icelandic women are interested in the ugly polaks they either bring their own women or die alone. And forcing kids to learn English is a thing in all Nordic countries.
And it doesnt surprise me a island pretty far away from the rest of europe doesnt have a big population.