MyISAM means MYSQL Indexed Sequential Access Method. Basically, It is a flat file, and is very old technology. But do not let that put you off using it. Because a flat file means it is not relational, and thus is not an RDBMS, and thus is more appropriate for some situations.
InnoDB is the full RDBMS like almost one you know. InnoDB is great for if you have a lot of relational links (with references, joins, etc).
With MyISAM, It implements locking on the table, and while that lock is held, no other session can perform a SELECT. With InnoDB, It implements locking on the row.
Additional thing, MyISAM supports full-text search.
Both MyISAM and InnoDB are good. But when you design database you need determine if you need features provided by InnoDB. If not, then MyISAM is up for consideration.