Well technically, every scene we shoot has a dynamic range. The dynamic range is the difference between the brightest part of that scene and the darkest part. Our sensor or film has a dynamic range too (technically it's exposure latitude - but we're picking hairs).
What we hope to accomplish is to capture that dynamic range of the scene into our image. So that the brightest part of the image (say the sky) is not blown out and devoid of detail, and the darkest part (shadows or foreground dark areas) are not lost into noise.
Sometimes the dynamic range of a scene can exceed the dynamic range of our camera, so we have to make a choice of what part we want to have the best exposure. Usually with digital it is best to have the brightest areas in good exposure and not blown out. But it can depend on the situation.
If we are shooting a portrait, we want our subject to be perfectly exposed even if that mean that another part of the image my not be. Some times that is a sacrifice we have to make, if we cannot change the conditions of the shoot nor have the option of supplementing the lighting.
This first image is underexposed. There is good light on the rocks but the sky and clouds are missing detail because of overexposure.so does the last image. The image is too overexposed, too many light.
THE EXPOSURE TRIANGLE IN PRACTICE
Now that we have a basic understanding of the three elements of exposure. Let's examine how we might use them and see the interaction between them.
Let's say we wanted to shoot an automobile race and we want to stop the action. It's a bright sunny day so we are going to use ISO100. We want to stop the action of the car going by us very fast, so we choose 1/1000 of a second shutter speed - but with that shutter speed according to our meter in our camera that would give us an aperture of 5.6.
So we know from what we learned about aperture, that may give us a shallow depth of field and there are other race cars we want to be within reasonable focus. So how could we fix this? We can't change our shutter speed, so we turn to the other part of our trio; ISO.
If we move our ISO up two stops to 400, we can then make out aperture two stops smaller and get the depth of field we need plus the shutter speed we need to stop the action.
We still have our camera set the same, but while we are at the races we spot a beautiful classic car in the parking lot. We want to isolate it from the ugly background so we decide that we now need a shallow depth of field. So we open our lens up to f4 on our 200mm lens.
This gives us great separation and DOF but that drives our shutter speed up to 1/6000th of a second! This would be OK - we are hand holding our camera, not stopping any action - but we want this to be a great shot worthy of a very large print.
So why don't we lower our ISO two steps to ISO 100, That brings our shutter speed down two stops to a still fast 1/1600 but because we lowered our ISO we will have much less noise in our image to be printed large.