Isolation is important if you need to separate two circuits completely, leaving no possibility of an electrical problem in one causing an problem in the other. The most challenging digital circuits to isolate are bidirectional data lines like the I2C bus. In this EETimes editorial the opto-isolation of the I2C bus is covered in detail.
The I2C-bus is fabulously popular and successful as a low-cost way to attach chips together in small embedded systems. In some systems, though, these chips need to be opto-isolated to avoid damage from stray electrical current in harsh environments. This hands-on article shows how to isolate I2C devices without giving up the advantages of this popular bus.