What does ISO means in digital photography?

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.

ISO is indeed related to lighting sensitivities. The higher the ISO, your picture may suffer too. Under very bright light or bright sunlight, a low ISO 50 will be enough. However, if you have a compact point and shoot camera, the ISO will set automatically, unless you are using the manual program. For close-ups, remember your lighting and don't get too near your subject. When the natural lighting is poor, increase your ISO. You can use the flash to help you so that your subject will be clearer and in focus.

You need to be careful with the higher ISO settings. If you have a DSLR Camera, one with interchangable lens, you can use the higher ISO with out too much problem with Noise. Digital Noise is a grainy look to you pictures in sharp contrast areas. If you have a pointand shoot camera I would try the different ISO settings and see what the results will be for different types of photos. I have a Canon A530 point and shoot and if I take a photo with and ISO setting of 400 I will see a little gaineness in the photo, but at ISO of 800 it is visable in almost all photos. With my DSLR Rebel I can shoot ISO 1600 and have no noticable noise in my photos. Try out you camera and see what ISO Setting works best for most of you photos.