ISO

ISO measures the sensitivity of the image sensor.  The lower the number the less sensitive your camera is to light and the finer the grain. The higher the number, the more sensitive to light the film is.
A low sensitivity means that the film has to be exposed to light for a longer period of time than a film with a high sensitivity in order to properly expose the image. With a lower sensitivity you also get a better quality image too which is why you should always try and use the lowest sensitivity you can get away with.

Higher ISO settings are generally used in darker situations to get faster shutter speeds (for example an indoor sports event when you want to freeze the action in lower light)

Situations where you might need to push ISO to higher settings include:

• Indoor Sports Events – where your subject is moving fast yet you may have limited light available.
• Concerts – also low in light and often ‘no-flash’ zones
• Art Galleries, Churches etc- many galleries have rules against using a flash and of course being indoors are not well lit.
• Birthday Parties – blowing out the candles in a dark room can give you a nice moody shot which would be ruined by a bright flash. Increasing the ISO can help capture the scene.

Reference
Digital Photography School (2011) ISO Settings in Digital Photography. Available from: http://www.digital-photography-school.com/iso-settings [date accessed: 10th October 2011]