In simple terms, ISO refers to the sensitivity of your camera to light. Lower the ISO, the less sensitive to light your camera is and higher numbers indicate greater sensitivity. This sensitivity is controlled by an image sensor and it is the most expensive as well as important part of your camera. It is what gathers up all the light and converts it into a viable image. While with better sensitivity, it takes more precise images in low-light without using flash, but it also introduces grain or noise to your pictures.
All cameras come with a Base ISO. This is the lowest ISO number the sensor is capable of producing high quality images on without bringing noise to the equation. Newer generation DSLRs tend to have ISO 200 as the lowest while Canon’s have ISO 100. So to get amazing picture quality you have to use the lowest ISO setting but this is not a good idea under low light conditions.
ISO numbers increment in multiples of two so starting with ISO 100, we go up to ISO 200, ISO 400, ISO 800, ISO 1600 and so on. Basically every higher ISO is twice as sensitive as the previous ISO. And if an ISO is 4 times sensitive to ISO 100 then it needs one fourth the time required on ISO 100 to capture light.
Where to Use What?
Always try and use the lowest ISO setting of your camera as this provides the best image quality. But, when the light is not sufficient or if the image you are trying to capture is one of rapid movement then increasing the ISO is the only way for a focused image.
Shooting indoors but without flash is one instance where you should increase the ISO. Taking an ultra-fast quick of a formula one car passing you by needs the highest ISO possible on your camera. Otherwise motion blur is introduced in the image.
Thankfully, many new age phone cameras and DSLRs today come with an Auto ISO option. These adjust according to the ambient light in the environment. You simply decide what the highest ISO is that you are okay shooting with and let the camera do the rest.