They are only doing so much better if you define better solely in terms of deaths (about 14x per capita). The difference is that New Zealand locked down; Iceland had much more modest restrictions (and did very well overall with containing the epidemic - a bit better than say the locked down Bay Area)

The interesting question is if "deaths/capita" is the correct and only metric. Both countries are basically at the end of their curve and Iceland lets say might lose about 200 years of life (using some worse case guesses for currently hospitalized) or about 5 hours a person.

What's better for the average person? A 4 week lockdown or life expectancy dropping by 5 hours?

In 2018, 3.82 million people flew into NZ, an increase of 1.2 million over the previous year. Iceland meanwhile received 2.3 million people in 2018, most from the United States, which is in line with historical averages of around 2 million.