ISO in a Digital Camera
In film photography, there was always a trade-off between capturing colour and detail versus the reaction time of the film to light; films capable of capturing the maximum detail needed a very fine grain, which responded slowly to light. Fast reacting films required a coarser grain, incapable of recording fine detail.
A films sensitivity to light was most commonly rated on the ISO scale (higher ISO meaning more light sensitive), and that has been carried forward into digital cameras.
The sensors inside digital cameras are getting better with each new generation. The latest models are capable of shooting in a range of ISO100-ISO3200 with little or no image degradation up to ISO400 or ISO800. However at higher speeds, a similar effect to the grainy appearance of high ISO films occurs; this is due to the camera being unable to distinguish between light from the scene and the inherent digital noise present on the sensor.
So How and When Should I Override Auto ISO
Lazy photographers (and I count myself amongst them) can get away with using Auto ISO in many situations. However, as it forms the third component of each pictures' exposure, you should never forget about it entirely.For example you may want a large depth of field in order to keep all points of interest in focus: in some cases the available light might make the small aperture required impossible without a tripod. In cases like these you may need to increase the ISO, taking the penalty of extra noise in order to get the shot.
To reinforce the point, the table below shows various combinations of shutter speed, aperture and ISO which all produce the same exposure.
