The ISK is Eve's unit of currency. Ingame it stands for "Interstellar Kredit", it is also a homage to the Icelandic kronur, currency of the country from which Eve's developers hail.
The ISK has no physical manifestation. There is no cash form of the ISK in Eve, unlike many other games which feature gold coins, pelts, chips, or bills. It exists only as a number in the accounts of players and corporations, and can be transferred instantly to anyone across any distance without fee or delay.
ISK can be bought legally (without violation of the EULA) using "real" money by Selling Timecards. The exchange rate between Eve ISK and the USD hovers around 14,000,000 : 1. (No ISK is actually created by this process; it is transferred from another character.)
ISK cannot be sold legally for "real" money. Though it is possible to sell ISK on eBay, to merchants like IGE, or directly to other players for real world currency, this is a violation of the EULA and the violator will be banned if discovered.
The Value of an ISK
20,000 - 500,000 ISK will buy a Tech 1 frigate.
3,000,000 - 7,000,000 ISK will buy a Tech 1 cruiser.
20,000,000 - 35,000,000 ISK will buy a Tech 1 Battlecruiser.
55,000,000 - 140,000,000 ISK will buy a Tech 1 battleship.
700,000,000 - 1,600,000,000 ISK will buy an unfitted carrier or dreadnought.
20,000,000,000 - 25,000,000,000 ISK will buy a mothership or an outpost
60,000,000,000 - 90,000,000,000 ISK is the estimated value of a Titan
Though the exceptions are many and varied, the average player performing the average ISK earning gameplay activity earns between ten and twenty million ISK per hour. When controlling for multiple accounts and considering income per labor hour averaged over months and years, the vast majority of players will fall into this range.