ISO actually stands for International Organization for Standardization. In photography world, it defines the level of sensitivity of your camera’s sensor to available light. ISO presets on most of the camera’s are in the sequence of 100, 200, 400, 800, 1600, 3200, 6400 and higher. Lower the ISO, less sensitive the sensor is to light and vice versa. Let me explain it with the help of an example.
Imagine the camera’s sensor as a factory, the picture you want to take as a job and ISO as number of workers available. What happens If the factory has to complete a job in a specified period of time but knows that It can not be done with the number of workers they have available? They get more workers to complete the job.
Likewise, when you take a picture, ISO is the number of workers that do the job of gathering the light on your camera’s sensor. Let us say that you want to take a picture but there is not enough light available, like while shooting indoors or at night. You changed your shutter speed to as slow as you could or let us say that you can not use a slow shutter because of the movement happening in the frame. So what do you do? You bump up your ISO, meaning that you put more workers on the job of putting the light together on the sensor. The more the workers, quicker will get the job done which means you will not have to slow down your shutter or make any changes in your aperture setting.
For example, let us say that you are capturing a small party held indoors and the room is kept a little dark to create the environment. It means that there isn’t enough light but you can not also slow down your shutter because people will be moving around and it will create blur. At the same time you can not also ask people to hold still every-time you click. So what do you do? You bump up your ISO to a level where you will not have to compromise on shutter speed.
So does it mean that you should always use a higher ISO? Answer is No. You should keep your ISO to the minimum possible number unless you deliberately want to overexpose or underexpose the image. Why? Lets go back to the factory example. What happens when you uselessly employ a higher number of workers? It will result in an added cost to the company and a higher chance of the job getting done in a disorganized manner. Same way, while a high ISO will help forming the image in a smaller amount of time, It also increases the risk of unnecessary noise in the picture.
Bottom line is, you should always keep your ISO at 100 in normal lighting conditions and increase it only when there is not enough available light to work with. The lowest ISO number will produce the highest image quality, without adding any noise in the picture.