What ISO denotes is how sensitive the image sensor is to the amount of light present. The higher the ISO, the more sensitive the image sensor and therefore the possibility to take pictures in low-light situations.
In digital photography, you increase the ISO level of your digital cameras when you need to take pictures where there is minimal light available especially when the use of flash is prohited like concerts, recitals, etc.
However when you boost the sensitivity of the image sensor of your camera by selecting a higher ISO, the image sensor is now able to record a fainter light signal. But it is also true that the increased sensitivity allows the image sensor to record more light signal and more noise.
What is noise then? Noise is apparent by the presence of color speckles where there should be none. For example, instead of a blue sky, you notice faint pink, purple and other color speckles amongst the otherwise blue sky.
So this means a higher ISO introduces noise. However, Noise Reduction Software will clean up the noise in some images, and sometimes it’s done well enough that you can’t really tell the original image had unacceptable noise level in it. A software can be easily downloaded from the internet. And I can say, it is so easy to use. The moment I learned how to use the software, it has become a must have in my software gallery.
Use a high ISO if it is a choice between missing a picture and being able to capture an image — even if it means you need to spend time cleaning out the noise in post-processing using a noise reduction software.
The best image quality is usually obtained at the lowest ISO setting on your digital camera. If by adjusting the shutter speed / aperture combinations, you still cannot obtain a correctly exposed picture (usually in low-light situations), then you may have to select the next higher ISO. However, remember that using a higher ISO usually results in noisy images on your digital camera.
The example photograph was shot at 800 ISO using my Canon IXUS 800 digital camera. A cropped portion of the photo is provided to show the noise inherent in the photo at this high ISO level. Sometimes this noise (but more often with film grain) is used for special creative effects. This photo could not have been taken at a lower ISO rating, but there was certainly a trade off in detail and in noise.
And this is how the photo turned out after cleaning out the noise in post-processing using a noise reduction software.