Lake Sorvagsvatn is the biggest lake of the Faroe Islands, located on the island of Vagar. The lake appears to hang over the Atlantic Ocean and eventually drains into it. It is a mystical sight to see if you are fortunate enough to visit the Faroe Islands. The photos and video you're seeing are actually an optical illusion. The reservoir isn't really hundreds of feet above sea level, it is actually closer to 30 meters.
The Faroe Islands are situated northwest of Scotland, about halfway between Norway and Iceland. The lake is located between Grothustangi and Vatnsoyrar. It is also located nearby Vorouklettar. It is a hike away upon arrival!