ISO is the sensitivity to light. The lower numbers 80, 100, 200 are the LEAST sensitive (but provide the best looking pictures). Sensitivity has to do with the amount of light needed to properly expose an image. ISO is a part of exposure that works with Aperture (f stop) and shutter speed (in seconds - or fractional seconds). Here's how it looks:
The graphic above shows that varying either of these three values changes the exposure. If you change one by one step, you have to change one of the others by one step to get about the same exposure result. Each of the step values on your camera for the shutter, aperture and ISO is twice as much as the previous value. ISO 1600 is 2x ISO 800, which is 2x ISO 400, and 2x ISO 200 and finally, 2x ISO 100 (some cameras go to ISO 50 or less!).
The shutter works the same way: 1/1000 is 2x faster than 1/500, and 2x 1/125, and 2x 1/60, and 2 x 1/30, etc. These are easy to see the how each is twice as much as the other.
Finally, the aperture. Each "f stop" allows 2x as much light as the previous value. f2 lets 2x as much light as f2.8, which lets in 2x as much as f4, etc. I know the number don't double like you would expect, and the smaller numbers allow more light (you'd think it was the other way around) - but it's because we're talking about a circular lenses and it has to do with how we calculate area of a circle (3.14 x R squared). It may be easier to recall small numbers = equal large openings by thinking of f numbers with a "1/" over them - like this: 1/f1.4, or 1/f2, 1/f2.8, etc. Here's a chart that shows how aperture and shutter speed work together at one ISO setting.
Read them across, the top line shows that 1/250 @ f1.4 is the SAME as
1/125 @ f2.0, which is also the SAME as shooting 1/60 @ 2.8, etc. If you
were to increase the by one step, the shutter speeds would increase by a
factor of two. Twice as much light by opening the aperture by a single stop means you must halve the exposure time or
halve the ISO value. Likewise, if it's too dark to get a decent picture; increase exposure time or ISO value to capture enough light.
Assume a properly exposed picture requires 1/30 of a second at f5.6 with ISO 200. If the camera was increased by one step to ISO 400, you can take the picture a f5.6 still but in 1/60 sec - greatly reducing the chance of blur from holding the camera in you hand. You could even go up one more step to ISO 400 and shoot in 1/125 sec, which would reduce the blur even more. Fast shutter speeds reduce the "camera shake" and stop motion in sports photography - or other moving objects. If you had the camera set up on a tripod, you could dial the ISO down to ISO 100 and shoot at 1/30 of a sec at f5.6. If your lens can open up to f4, you can shoot in half the time because the lens is letting in twice the light. Some point and shoot cameras don't allow changing f stops or even shutter speeds - so all you can do it raise and lower ISO.
Which camera and flash do you have?