ISO is a term that comes from the days of film photography. The term itself is a bit of misnomer, but is has carried on into the digital realm, so we’ll accept that and move on 
.
With film cameras, you needed to buy different rolls of film for different situations. The basic film was ISO100. This was for situations when you had a lot of light – like outdoors on a sunny day. For indoor photography, most people switched to rolls of ISO400 and ISO800. These film stocks were more sensitive to light, allowing the photographer to take photos in low-light situations.
Have you ever taken a photo indoors and noticed it came out blurry? That is because at a low ISO setting, your camera leaves the shutter open longer to allow more light to expose the sensor. Unfortunately, unless you’re using a tripod, this usually results in blurry photos. Cranking up the ISO in your camera can help. Each step in ISO is essentially doubling the amount of light that will hit the sensor – going up one f stop. The main ISO settings are 100, 200, 400, 800, 1600, and cameras are now using 3200 and 6400 settings.
The only downside to cranking the ISO is that your photos may be subject to more grain and noise. This will appear as fuzziness in your image, or spots. These spots are sometimes white specks, and they can also be different colours. Cameras keep getting better, but no matter what you will see an increase in the amount of grain in your images when using ISO800 and above.
Info – ISO Settings 
http://digital-photography-school.com/iso-settings
Digital Camera Image & Noise: Concept and Types [Video]
http://www.cambridgeincolour.com/tutorials/image-noise.htm
What is ISO in Cameras? [Video]
http://www.youtube.com/watch?v=GDqgyRF6DHI&feature=channel