In the era of film photography ISO (decoded as International Organization Standardization) was an indication of how sensitive a film is to light. Now this parameter is applied to digital cameras and defines the sensor’s light sensitivity. It is variable, i.e. you can specify it and record photos shot with different ISO levels on one and the same data medium. With film cameras you had to change the film to raise or lower ISO level.
The higher ISO level is, the more sensitive the sensor is and accordingly you can take handheld photos in low-light conditions without using flash. Higher ISO allows you to set faster shutter speed and consecutively to get crisper photos. And at the same time – noisier photos.
Noise in digital photography corresponds to grain in film photography. This undesirable effect shows itself in the way of colored dots that appear in a photograph.
Noise depends not only on ISO level but also on sensor size and on pixel size: the bigger the sensor is, the bigger are the pixels. The bigger pixels are, the more light they capture, and so the camera is.
Nowadays there are lots of consumer cameras with really tiny 1/2.3” sensors in the market. And though there’s a tendency to make compacts with larger sensors, their advantages are lost in megapixel race. Remember that of the two cameras with equal sensor sizes more noise will be generated by that one with more megapixels of resolution!
It is not as dramatic with digital SLR cameras as they have large sensors, not mentioning full-frame dSLR-s with 35mm sensors. That’s why they can generally take high-quality photos even at ISO 1600, 3200, or even higher speeds, while compact cameras tend to produce noisy images already at ISO 400.
Compact cameras also can take good-quality photos in good light, providing that you select the lowest ISO level. Moreover, small amounts of noise can be removed with the help of special software such as Noise Ninja, Neat Image and other without considerable loss in picture quality.