The Blue Lagoon is a spa experience that is geothermal water with minerals in it. There are several different levels you can book, but the basics are you arrive (getting there without a rental car can be a bit of a challenge but is doable) by car and park in the lot, and walk into the large welcome facility, Here you will find the restaurant, the beauty products store, the check in desk, and the locker facilities.
Once you check in (pre-booking is your best option because they often sell out of daily tickets) and get a wrist band, you head to the gender specific locker rooms, where you shower off, and change into your swim suit. You then enter into a holding room/entry way, and after that you go into a large large pool with warm very blue water.
You can stay as long as you want (at least when I went a few years ago) and there is no time limit. You get one free mud mask to put on at a booth inside the water, and one free drink at a booth inside the water. Anything extra you can charge with your wristband. There are lots of different areas to explore, I mean the pool is huge, with little nooks and crannies, and waterfalls. Different areas are hot or cold, and they also had different lectures going on throughout the day on the history of the lagoon etc. All while you are in the water. For extra fees you can even book an in water massage.
Is it full of tourists? Yes. Are there cheaper options for going in geothermal water in Iceland? Yes. Is it worth it? If you like soaking in hot water, and relaxing in the outdoors, I think so. The saunas are also a great addition.
In my option, the Blue Lagoon needs a half day not to feel rushed. 3-4 hours of non-stop soaking is a good amount. If you really enjoy the spa experience you can make it a full day deal by adding additional services and meals which comes with added costs of course.
Would I go to Iceland just for the Blue Lagoon..... probably not, but any excuse to go to Iceland is a good one in my option.