Under reg-nms a venue normally cannot trade through a better quote elsewhere. The ISO flag is the exception: by marking it, the sender takes responsibility for having swept the away markets themselves.
That makes ISOs the tool of choice for institutions and high-frequency-trading firms clearing multiple venues in one shot, and it explains prints that appear to violate the nbbo but do not.
Example: best offer is 10.00 for 100 shares on venue A; venue B shows 10.01 for 20,000. A buyer sends an ISO to A for 100 and an ISO to B for 20,000 at the same instant. B fills at 10.01 legally, because A's protected quote was addressed simultaneously.
Related: nbbo, sweep-to-fill