This is the voltage requirement in which primary and secondary coils must withstand from each other. It is usually in terms of the application of the transformer or inductor. In other words, independent of the voltage applied to the primary and voltage transferred to the secondary, there is a voltage difference between the primary and secondary that must also be met. It could be a voltage in the same range as the primary or secondary voltage or much, much larger. In medical applications the isolation voltage can be many thousands of Volts even if the primary and secondary voltage is 20 or 30 Volts.
Say you have one part of your circuit that you need to float above ground. Or say your equipment has a possibility to feed high voltage back into the power supply. You want to know what the maximum isolation voltage is. This is usually defined as the voltage between the input and the output (or chassis) of a power supply that would cause it to either fail, or to conduct a certain number of microamps of DC current, and is often in the kilovolts.
Maximum voltage (AC or DC) that can be continuously applied between isolated circuits without a breakdown occuring. On converters, this is normally specified as input-output or input-case isolation. Minimum isolation voltage levels be maintained to meet most safety regulations. Also see Breakdown Voltage, High Potential and Isolation.