In traditional photography ISO was an indication of how sensitive the film was, the lower the number the lower the sensitivity of the film and the smaller the grains on the film. In digital photography ISO measures the sensitivity of the image detector. The lower the number the finer the grain just like in traditional photography.
ISO can also help to define pictures and make sharp edges on parts of the picture whilst leaving the background slightly hazy and blurry.
ISO stands for ‘international standards organization’, ISO used to be known as ASA which stood for ‘American standards association’.