The ISO setting on your camera is a measure of how sensitive your camera sensor is to light. In the days of film (Okay, I know. I know. Film is still very much around.) you would see the ISO number indicated on a roll of film listed as the film speed. With film you were stuck with that ISO setting until you finished the roll of film. On your digital cameras today you scan switch ISO settings with each image you take. This gives you great creative freedom. You can choose from ISO 100, 200, 400, 800, 1600, and even higher within any given shoot. But what do these numbers mean?
It's actually very simple. A low ISO (100) is not very sensitive to light. A high ISO (1600), on the other hand, will be very sensitive to light, so you can take pictures without flash in much dimmer settings than you could at the lower ISOs.
To make this crystal clear, it's time for yet another analogy from Bryan Peterson's book Understanding Exposure. (You really should run out NOW and get a copy for yourself. It's super user-friendly. Besides, I'm thinking he should probably give me some kind of kick-back for how often I refer his book, right?) Anyway, Bryan Peterson uses the analogy of worker bees to explain how ISO settings affect your images.
Imagine you have 100 worker bees on hand to gather the light in an image and deliver it to your camera's sensor. Those would be some speedy worker bees, right? Well, now imagine you have 200 worker bees to gather the same amount of light. It would take those bees half as long to gather the needed light as the 100 bees took. 400 bees would gather the light 4 times as fast. 800 bees would gather the light 8 times as fast. You get the picture. So, each time you double your ISO setting you can halve the shutter speed. So, you will be able to use a faster shutter speed in low light. This is probably the most important aspect of ISO.
How does this affect your photography? Let's say your aperture is set as low as your lens will allow at f/1.4. Unfortunately, you forgot your tripod at home, so you are limited at how low you can set the shutter speed (since you will be hand-holding the camera). You won't be able to set the shutter speed as low as your camera's light meter suggests in order to get a proper exposure when you are in a dimly lit room.
How can you get more light onto the sensor so that you can shoot at a higher shutter speed and forego the tripod? Simply increase your ISO settings on your camera. If it is set at ISO 100, try ISO 200 first. If you still need a faster shutter speed, try ISO 400. Continue adjusting the ISO settings until you reach a fast enough shutter speed to shoot without a tripod. It goes without saying that each time you adjust your ISO settings you will also have to adjust your shutter speed until your camera's light meter indicates a proper exposure.
(Not sure what a light meter is? Grab the manual that came with your camera and figure this out fast! Understanding your light meter is crucial to learning how to shoot manually.)
You should also know that colors will be most saturated and images will be sharpest at the lower ISO settings. In most cameras you will also see increased "noise" or graininess in images where higher ISO settings are used. For this reason, since I shoot using available light, I always try to shoot in conditions that allow for an ISO setting of 100.
How do you know what the slowest shutter speed is that you can shoot your particular lens at without having to use a tripod? That's pretty simple as well. Generally speaking (unless you have a VERY steady hand) your shutter speed should not fall below the lowest mm reading on your lens. For example, if I am shooting with my 50 mm lens, I should try not to shoot without a tripod if the shutter speed is lower than 1/60th of a second. Shutter speeds faster than that should result in images that are pretty clear when hand-held. If you are using a 24-70 mm lens, you should not shoot slower than 1/25th of a second without a tripod. If you are using an 85 mm lens, your lowest shutter speed should be 1/100th of a second. Anything slower than that requires a tripod.
So far we have learned about Shutter Speed, Aperture, and ISO settings. Together these three make up what Bryan Peterson (there's that name again) refers to as The Photographic Triangle. Simply put, a correct exposure is a simple combination of these three factors.
But what is a correct exposure? That all depends on the desired result. Do you want to freeze the action, then place priority on a fast shutter speed and adjust your ISO and aperture settings until your camera's light meter indicates a correct exposure. Do you want to record the tail lights on passing cars as a blurry streak of red and yellow? Then, place priority on a slow shutter speed. Do you want to isolate one candle on top of a birthday cake? Then, place priority on a large aperture (small f-stop) adjusting your shutter speed and ISO settings afterward to indicate a correct exposure.
Any number of combinations of ISO, Shutter Speed, and Aperture can result in a correct exposure. Only one of those (usually about six or seven different options) combinations is what Bryan Peterson refers to as The Creatively Correct Exposure. And that, my friends, depends upon you - the creative force behind the lens.
Here are some general guidelines about which ISO setting to use:
Outdoors in brightly lit sunlight - ISO 100
Outdoors but in overcast light - ISO 100 or ISO 200
Shooting indoors without flash - ISO 100 if possible, use higher ISOs when needed
One last note: When adjusting your ISO settings, always remember to change it back to ISO 100 at the end of the shoot - unless, of course, you are purposefully trying to increase the grain in your image for artistic affect. Just remember, the preferred ISO for highest sharpness, color saturation, and image clarity is ISO 100. That should be the starting point for every shoot.