No that is not keysmash, that is a real word in Icelandic. Well kind of… In Icelandic you can create very long conjunctions of words. A simple example would be “apple tree”. In Icelandic you would say “eplatré” which is a conjunction of “epli” and “tré”. Conjunctions like these can generally be made longer. Let’s say you have a specific ladder only used to climb apple trees. This “apple tree ladder” could be called “eplatrésstigi” and if it were made of wood it you call it a “eplatréstréstigi”. I’m pretty sure nobody has ever said that word before, but it is a valid word.
That’s how what is often referred to as the longest word in Icelandic came about: “Vaðlaheiðarvegavinnuverkfærageymsluskúraútidyralyklakippuhringur”. The meaning of the word is: “Key ring of the key chain of the outer door to the storage tool shed of the road workers on the Vaðlaheiði plateau”. You could easily lengthen the word by being even more specific.