ISO

ISO determines the sensitivity of light on the camera.

Here is two photos taken using High ISO (6400)
High ISO
If you set your ISO high the photo will turn out with quite sharp pixels, but this might not be a problem if you aren't going to enlarge the picture afterwards. As a small picture its going to look pretty good. We use a high ISO when the light isn't good. It makes the shutter speed short so that it freezes the picture instead of dragging it out, which it will do if the light is bad and you don't have your camera set on high ISO.

Here are the same photos, but taken with the ISO  

 turned down to 100:

Low ISO
Low ISO is used when the lighting is good and the shutter speed can be slower. A picture will turn out a lot more detailed and smooth if the camera is held still. If you are taking a photo in bad lighting on the other hand, the photo will turn out blurry.

Here are the same photos, but taken with the ISO turned down to 100:

All photos have been taken using Canon EOS 1100D.