IOS stands for "International Organization of Standardization." This organization sets the standards for photography, so ISO settings are based on those standards.
ISO settings refer to how much light the camera captures. With film, it refers to how much light the film would capture, while with a digital camera, it refers to how sensitive the image sensor is. A lower ISO setting captures less light, while a higher ISO setting captures more light. Higher ISOs can help capture images when there is less light. However, higher settings also makes photos grainier, which can result in a loss of quality in the image.