ISO and Exposure
As you will learn from books such as Brian Peterson's Understanding Exposure, correctly exposing a photograph depends upon the settings applied to shutter speed, aperture, and ISO. These three elements are crucial in determining the proper exposure for your pictures. While you can set your camera to automatically take care of all three, knowing the effects of adjusting one or more of these factors can greatly improve your photography, and lead to a better artistic control.
Using ISO correctly gives a photographer more flexibility in how they expose their images. For instance, if you have your camera set to aperture priority mode, you set the depth of field, (f-stop), and the camera automatically chooses a shutter speed to properly expose your image. So, maybe your ISO is set to 200, you are shooting at f/5.6, and the camera chooses a shutter speed of 1/30 second. This may sound fine, but 1/30 second is not easy to handhold without camera shake, and it will not freeze any movement in your shot. When you change the ISO to 400, you are allowing twice as much light to reach the camera sensor, and you will now be able to achieve a shutter speed of 1/60 second without changing your aperture from its original setting. Increasing the ISO to 800, would double the amount of light again, and give you a shutter speed of 1/120 second. The same 'light gain' effect can be achieved when shooting in manual or shutter priority mode.
Some DSLR cameras, like Nikon's popular D90, give the photographer the option of using an auto ISO setting in manual and semi-automatic modes. When this is applied, the photographer can set the aperture and shutter speed themselves, and the camera will use this data to select the best ISO to expose the image correctly. This works well in all but the dimmest of lighting situations.