ISO is a measure of how sensitive your camera is to light. It is a holdover from the film days, but is still very relevant in the digital age. For film, it is how quickly the film exposes given a certain amount of light. For digital, it is how sensitive the digital sensor is set to. In both, the trade-off for speed is quality. With film, the crystals that react to light were bigger, leading to more grainy images. In digital, the sensor has to do more with less light, leading to noise (those multi-colored dots that show up when the ISO is too high).

The scale is based around multiples of 100: 100, 200, 400, 800, 1600, 3200, etc. ISO 100 is usually used in full sunlight or with flash. It gives you the best quality but you need to have a lot of light, large apertures, or long shutter speeds to get a good exposure. ISO 1600 is the top of the range for a lot of cameras, although newer cameras are getting up to 6400, 12800, and 25600. In this higher range, you can shoot indoors without a flash, but as I mentioned, the quality of the image will not be as good.