ISO is a way to brighten or darken your photo. You are essentially increasing or decreasing your camera's light sensitivity. If you have the shutter speed you want and the depth of field set but your exposure is still too bright or dark increasing or decreasing your ISO is how to go about dialing in your exposure. When you increase your ISO from 100 to 200, you let in twice as much light, the same goes for 200 to 400 etc. You double your ISO, you double the light. The same goes for decreasing your ISO. 400 to 200, you let in half the light.
The downside to increasing ISO to brighten your exposure is introducing noise in your photo. You can see the difference between these two photos. The first photo was taken at ISO 100 and the second photo was taken at ISO 6400.
So why would you change your ISO? Most of the time it is for low light situations such as night shots or action/wildlife photos.
For most photos, leaving your ISO at its lowest setting is preferable. It will produce sharper and cleaner images. But, if you are shooting action or wildlife such as birds, increasing the ISO will be needed. Trying to take sharp, focused photo of a bird in flight, your shutter speed may need to be 1/1500 of a second but you want an aperture of f8 because that is the sharpest aperture for your lens. Now increasing your ISO from 100 to 800 can get you to the correct shutter speed without the photo being to dark of have blown out highlights.
The best thing to do is to take test shots at different ISO settings and observe the results. When you increase your ISO, the compensate for the photo becoming overexposed, you will need to increase your shutter speed. This all takes practice and once you understand the basics, photography will be come much easier and more fun.