Here is the reason when the aircraft returned. An emergency will usually warrant a diversion to the nearest suitable airport. A failure which is not an emergency is left to the discretion of the captain. Consider a single engine failure on a 747. If the reason for the failure can be determined to be contained (eg maybe oil pressure warning light asked for the engine to be shut down) then as the aircraft can safely fly with a further failure, it can continue to destination or even return. A lessor failure like a detector might not affect flight safety but it could ground the aircraft as seen by the Mel(minimum equipment list)

Simple failures can also ground the aircraft. For example let’s say the nav lights bulbs blow during the flight. The plane can safely fly but the Mel might not allow the aircraft to fly. If it is already flying, then that’s ok.

The choice of airfield is affected by three main reasons, accommodation for pax, easy of repair and also crew rest. 

In this case, even if the plane had a simple fix and diverted to Iceland. The crew would quickly run out of hours to fly anywhere else and a long stop for rest will become necessary and hotels for pax. The plane is then out of service for much longer than if it returned to home base where alternative aircraft and crew are available