What is isolation? Why is it needed?

Isolation is a means of preventing current from flowing between two communicating points. Typically, isolation is used in two general situations. The first is where there is the potential for current surges that may damage equipment or harm humans. The second is where interconnections involve different ground potentials and disruptive ground loops are to be avoided. In both cases, isolation is used to prevent current flow yet allow for data or power flow between the two points.