That last sentence is much too long. I had to read it twice.That's not quite correct but you are on the right track.I'm sure they are.Perhaps each camera is different. With mine, images shot any higher than ISO 400 are going to be unacceptably noisy to me, and images shot at ISO 200 (my camera's lowest setting) have more clipped highlights than those shot at ISO 400, so my camera stays at ISO 400 all the time. In light too dim for handheld exposures at that ISO, I either mount a flash or put the camera away. Following this procedure, noise is never an issue, and I never have to think about ISO.
But what was beaten into my head was that raising the ISO does NOT Raise the sensitivity of the sensor. What it does is increase the amplification of the photons that the sensor receives.
Raising the ISO increases the amplification of the voltage the photons generate on each sensor pixel. Once the shutter closes, the number of photons doesn't change.
There are 2 sources of noise in an image:
1. Shot noise - noise inherent in the light coming from the scene.
2. Read noise -
a) Front End Read Noise - noise introduced by the camera itself; heat, camera electronics prior to the voltage being amplified.
b) Back End Read Noise - additional noise some cameras introduce when the voltage is converted to a digital value.
Shot noise is the result of low levels of light hitting the sensor.
Both the effects of shot noise and read noise are included in the pixel's final digital value.
Now, when you raise the ISO in camera only the shot noise and Front End Read Noise are amplified when the voltage is amplified. The Back End Read Noise, if any, is introduced after the voltage has been amplified and during its conversion to a digital value.
If you raise the "exposure" in a raw converter you are essentially just multiplying the final digital value for each pixel which will include Shot Noise, Front End Read Noise and any Back End Read Noise.
Unless you are fully aware of the camera's noise properties (whether it introduces back end read noise or not), to minimise noise in the final image you are better off raising the ISO in camera (assuming you cannot widen the aperture and/or slow the shutter because of DOF, motion blur constraints) than shooting with a lower ISO in camera and increasing the image lightness in post because raising the ISO results in only the Shot Noise and Front End read Noise being amplified. In PP, raising the "exposure" results in the Shot Noise, Front End Read Noise AND Back End Read Noise being amplified.
What you say makes sense. But how are photographers to find out how a particular camera behaves ? The DPR reviews don't test or measure it. Maybe Jim Kasson does, or Bill Claff.
Does the amount of analog gain increase with every step of the "ISO" numbers, or are there only two or three changes across the whole "ISO" range ? Or no changes at all ?