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Why would you not use the highest ISO number possible all the time? Because as the ISO number increases, image degradation occurs. Faster speed films or digital settings produce lower resolution and less detail than their slower speed counterparts. With film the higher speed uses a larger crystal which creates larger grain in the image. This grain shape is sometimes used as for an artistic purpose. In digital photography the degradation is called noise which is random color and light pixels especially in the dark regions of the exposure.
Unlike film, digital noise is never considered desirable or artistic. As digital cameras become better, the noise amount is becoming less noticeable even at high ISO speeds. All grain and noise is usually not very noticeable at a small viewing size. The grain or noise becomes more noticeable as the print enlargement size increases. There are filters in Adobe Photoshop to simulate the grain look for digital images and to help reduce the amount noise from higher ISO settings.
The decision of what ISO to use depends on the amount of light in the scene and the required shutter speed of the camera. If you are trying to freeze action in an indoor setting, the ISO speed will usually range around 800-3200. The increased light sensitivity makes for a faster shutter speed setting to enable the freezing of the action. When shooting still life, the shutter speed can be slower if using a tripod. This allows for the lowest ISO setting to be used to ensure the lowest amount of grain or noise in the image.