ISO speed describes how sensitive your camera's sensor is to the light that hits it. A more sensitive sensor will produce the same overall exposure from less light, meaning that you can use a narrower aperture or faster shutter speed in the same conditions.
ISO is measured using values that correspond to the ASA scale for film, with a higher ISO number relating to a more sensitive sensor. As with shutter speed, doubling the ISO number gives an increase of 1 stop, while halving gives it a decrease of 1 stop.
For example, switching from ISO 100 to ISO 200 doubles the sensor's sensitivity, producing a 1 stop increase. Moving from ISO 800 to ISO 400 is a 1 stop decrease. Most cameras let you change ISO speed in increments of 1 stop.