TL;DR: In low light conditions, selecting manual or auto ISO is a decision about risks: having lower or higher noise vs. the probability of blurred pictures vs. time.

ISO, aperture, exposure time - these are the in-camera values that determine our photo. (Using a flash adds another one.)

It does not matter how the camera arrives at these values. E.g. ISO 400 is ISO 400, same noise level for the same conditions, no matter if you set it manually or automatically.

The question whether any given set of values (e.g. ISO 400, f/2, 1/60s) is optimal is highly subjective, because we can optimize for different things.

In fully automatic modes, the camera usually optimizes for a high probability of getting a usable photo. That is what we want for snapshots. We can't repeat the shot, we have to get it right the first time. We use "safe" values, or risk having no photo at all.

If we have a little more time, we can set some guidelines for the camera, we can set a fixed aperture or exposure time, a fixed ISO or a range of acceptable ISO values. That way, the camera can select values closer to what we see as the optimum. E.g. we can either set higher ISO, or risk getting more blurred images for a few good ones with less noise.

If we have a lot of time, we can select more or all values manually. We can do a lot of shots with the same values until we get one shot right. We can do a lot of shots with different values to find the best ones. And we know a few things the camera doesn't. E.g. that the camera sits on a wall or on a tripod and we can get away with lower ISO and much longer exposure times.