It was colonization in the sense that it was people who struck out and formed colonies removed from their homeland.

It was not colonization in the sense of foreigners settling an inhabited country and dominating an indigenous population. Now, by all accounts (Íslendingabók, Landnámabók) there were Irish (probably) monks there, the Papar, when the Norsemen arrived. Toponym and some indications from archaeology indicate this to be true as well, even if the details of the written accounts - such as the years - are dubious. Now if the written accounts are correct, the Papar could not reasonably be called a native population. They were ascetic monks seeking isolation, had not been born or raised in Iceland, nor did they have families there or necessarily intend to live there permanently. Supposedly they left of their own volition when the pagans came and disturbed them.

In an opposite situation one has the Sami (Laplanders). Norway and Sweden began claiming dominion over Lapland as well as its inhabitants in the Middle Ages. But apart from coastal areas they did not settle there, and the Sami were by-and-large left alone at the time, with the result that they actually had more rights than their colonizers, among other things in that they were exempt from taxes, not obligated to attend church, and were allowed to hunt elks and reindeer, which otherwise was a noble privilege. (not to sweep under the rug the fact that their rights would be increasingly curtailed as government power grew in the area starting in the 17th century)