ISO

The ISO button typically is located on the top of Canon EOS cameras. By increasing the ISO you are increasing the amount of electricity going to the sensor, but what does this mean?

By increasing the electricity going to the sensor you are increasing the sensor's sensitivity. A higher ISO setting will allow you take properly exposed photos with a faster shutter speed. This is useful in low-light conditions.

Let's say for example you are shooting your subject inside where there is not much natural light. At ISO 100 you will need a longer exposure time to get your subject correctly exposed. If your subject is moving, or you're not using a tripod the result will most likely be a blurred image. If you increase your ISO (and therefore the sensitivity) you can use a shorter exposure time resulting in an image that is not blurred and is correctly exposed.

ISO 800, 1/8th second exposure
ISO 100, 1 second exposure (note the blurring from camera shake)

You might be thinking now 'Why not always use a high ISO setting'? There is a drawback to using a high ISO setting. The higher the ISO is set the more 'noise' will be in the final image. It is therefore best to always use the lowest possible ISO setting that the light conditions will allow.

This picture from Wikipedia illustrates the effect of ISO on noise. The image on the left has been taken with a high ISO setting and a faster shutter speed. The image on the right has been taken with a lower ISO and a slower shutter speed.