Island Stagley is the southernmost of the Vestureyjar archipelago, just south of the centre of the bay. Islands Bjarneyjar are 4-5 km to the north, Islet Grassker the same distance to the south and Island Ellidaey double that distance to the east. Island Stagley looks rather uninviting, flat and open to the weather and brakers, but it is larger than the eye sees from the sea and has its relatively short history of inhabitancy.
It was used for cattle grazings according to the Sturlunga Saga and probably was populated in 1570, when it was the property of the Reykholar Church. The Flatey County bought it around the middle of the 20th century and was used for hay making and as winter grazings for sheep. In 1681, two families lived there and according to the census from 1703 fourteen people lived there. During that century one or two families lived on the island, but shortly after 1801 it was permanently abandoned.
The island is isolated and other islets of the group do not offer any advantages. Its inhabitants based their livelihood mainly on the nearby fishing grounds and somewhat on egg picking, bird hunting and eider down collecting. It did not carry many domestic animals as can be seen in the 1701 Farm Registry, where only three cows and one heifer are mentioned. Landings on the island were difficult, the surf and brakers often banned fishing and sometimes calm weather added to the isolation. Water supplies were limited and the other inhabitants of the county opposed the inhabitancy of the island as they suspected the farmers there of hunting hundreds of eiders for survival. Since the island was abandoned, the vegetation has flourished and the number of birds has increased greatly.