IV is backed out of option prices using a pricing model. High IV means the market expects big moves and options are expensive; low IV means the opposite. IV rises into events and in selloffs, and falls when uncertainty resolves (iv-crush).
IV is only meaningful relative to the asset's own history, which is what iv-rank captures. A one-standard-deviation expected move can be estimated as price x IV x the square root of days / 365.
Example: a $200 stock with 40% IV has an expected one-standard-deviation move over 30 days of about $200 x 0.40 x sqrt(30/365) = $23.
Related: iv-rank, iv-crush, vega, volatility, extrinsic-value