Auto-ISO is an excellent feature. It shifts one of the most redundant tasks from the photographer to the camera. Whenever we can free the photographer up from redundant tasks, he or she can concentrate more on composition, framing, Depth of Field and all the other things that are important to photography.
But before we get into the good stuff, it is necessary to explain what exactly the ISO setting does in your camera. The “standard exposure” is one where the image has the brightness of about 18% grey. Camera metering will always attempt to generate an image that adheres to that standard, (unless you tell it not to through Exposure Compensation). The camera can achieve that brightness through adjustments of Shutter Speed, Aperture, and ISO setting. (This is often misrepresented as the “Exposure Triangle”, when in fact it is the “Brightness Triangle”. For a more in-depth discussion of Brightness vs Exposure, see gollywop’s article.) While Shutter Speed and Aperture controls how much light will fall onto the sensor, ISO setting does not; all it does is amplifies the electronic charges that the incoming light has produced. In other words, ISO setting is amplification setting.
It is pretty basic stuff that the less amplification is involved, and the more original signal is captured, the better the output’s quality. This holds true for almost anything, not just photography. Therefore to maximise image quality, we should always strive for more light onto the sensor and less amplification. To achieve that end, we should always tweak aperture and shutter speed first and then use just enough amplification to get 18% grey. I have written an article on how to achieve this by using M + Auto-ISO, but this article concerns with Av + Auto-ISO, so we will move on.
Under Av + Auto-ISO mode, the photographer will set the aperture; he does this for DOF or sharpness considerations. The camera then sets ISO to minimum and set Shutter Speed to the value that will generate 18% grey. But if Shutter Speed has to fall below a certain level, the camera will keep the Shutter Speed above it and increase ISO instead to avoid hand shake blurs (we shall call this Minimum Safe Shutter Speed, MSSS). The camera does this until it reaches maximum ISO setting possible (which can be set by the photographer). In other words, the camera will make sure the sensor gets the maximum amount of light practicable, and then apply no more than necessary amount of amplification to brighten the picture.
Obviously this method, just like Av in general, is not best suited for shootings where the subject moves and has to be frozen at a certain shutter speed that only the photographer knows. Instead, it is suitable for situations where the subject is static, and the only thing that could generate blur is photographer’s own hand shake.
The most useful situation of this method is when using zoom lens. At shorter Focal Length, slower Shutter Speed will produce blur free image while at longer Focal Length faster Shutter Speed is need, therefore it makes sense for MSSS to change as you zoom in and out. All current Canon and Nikon DSLRs do this. For Canon, the MSSS is roughly 1/ (2x FL). So for example you use 17-55mm USM IS F2.8 on 60D, at 17mm, the MSSS will be 1/30s; at 55mm, the MSSS will be 1/100s
Nikon is several steps ahead of Canon when it comes to Auto-ISO. You set a fixed MSSS, or you can choose between five different rules. Under the slowest rule, the MSSS is 1/ (0.25 x FL); under the fastest rule, the MSSS is 1 / (4 x FL), with the three rules in between: 1 / (0.5 x FL), 1 / FL, and 1/ (2 x FL). So the photographer can choose the rule that suits his hand steadiness the best. Even more impressive is the fact that some Nikon DSLRs have User Mode which you can assign a different rule. For example on my D600, I have made U1 mode Av + Auto-ISO with MSSS bring 1/ (2 x FL). Whenever I need someone else to take a picture for me, I set the camera to this mode, set the aperture, and I know that their untrained hand is not going to ruin the shot with shake blurs regardless which Focal Length they choose to use on my 24-85mm VR. On the other hand when I use Av mode myself, I stick to 1/FL.
I hope you will find this article useful, and if you have any questions please ask.