A friend recently got their first SLR and wanted to know more about it all, so I wrote the below. Its probably horrendously non technical and is simplified, but it should give you an idea of the basics.
Rather than get tied up in tech speak, an image is defined by light, a camera is just a device that records light, as luck would have it this (sometimes!) creates a nice picture!
Ok, so how does it take a picture ?
Well, in the camera itself (known as the "body") you have a shutter. this is basically a flap that opens, when it opens the sensor inside is obviously exposed to light - the sensor "sees" the light and records it, voila, a picture!
In the lens there is a hole, this hole is the only way light can get through the lens to the body.
Ok, so if we want to control the light that the sensor "sees" we have two options:
Adjust how long the shutter is open for, or make the hole bigger or smaller.
The first is shutter speed, the second is aperture.
Shutter speed is measured in time, usually fractions of a second like 1/200th.
Aperture is measured in f stops. The f stop number is actually a calculation. To find the f stop take the focal length, divide it by the diameter of the hole in our lens, the result is your f stop. So, lets say we have a 50mm lens (this is the focal length) and the diameter of the hole is 25mm thats f2. So from this we now know that low numbers = big hole, high numbers = small hole.
The final part of the exposure trinagle is ISO. This is how sensitive the sensor is to light, the more sensitive the higher the number.
The setting of each of these three things can affect the exposure, but each of them have side effects...
If you make the shutter speed too long you won't be able ot hold the camera still, this has the effect of blurring the picture. Also, in some cases if you have a long shutter time you may pick up movement that isn't desirable, for example imagine taking a picture of a horse in a forest. If we had a slow shutter speed (i.e. shutter is open for a long time) the horse may decide to wander off, this movement will be picked up in the picture and ruin it.
If we want to convey a sense of speed in a picture we might actually pick a slow shutter speed so that a little bit of movement can be seen. A tpyical example of this is taking pictures of cars or bikes - if we shoot at 1/500 the shutter isn't open for long enough to "see" the wheels turning, as a result its like a freeze frame and the vehicle looks like its stationary - not the effect we wanted.
Changing the aperture has an effect on something called depth of field, wikipedia has a decent article on it here :
http://en.wikipedia.org/wiki/Depth_of_field - in summary DoF controls what is in focus in your picture - sometimes you see a picture of a person (for example) where they are in sharp ofcus, but the background is fuzzy or obscured ? thats what we would call a shallow depth of field. A wide aperture (big hole, small f number) can cause this. In some cases a shallow DoF is exactly what we want, at other times we definitely don't want one - landscape photography for example rarely uses a shallow DoF, typically it has a wide field of view (lots of stuff in the picture) and we want to see all of it. Conversely if you want to pick out a subject amongst others using a shallow DoF is definitely what you want to do.
If we go too far and pick a narrow aperture (high number, small hole) we'll make the shutter speed too long..
Changing the ISO setting on a digital camera has one big drawback - noise. Not literally ! noise in this sense is when a picture looks grainy, which obviously spoils the overall effect. I always see ISO as the last resort for this reason. Then again, if you want to create a gritty, dirty looking image its perfect! especially for black and white pictures.
So, its a balancing act. Fortunately these days cameras are clever enough to help us do this stuff. Commonly photographers will use a mode called "aperture priority". This basically means that the photographer sets the aperture they wish to use and the camera will work out the shutter speed and ISO. Many will go one step further and set the ISO as well, leaving the camera to just deal with the shutter speed.
I found it easier to understand the relationship between these things by setting the ISO rather than leaving it on "Auto", this meant that I could see what effect changing the aperture had on the shutter speed without the camera altering the ISO and confusing matters.