Actually an isolation transformer may be physically the same as a Step up/Step Down transformer. The main difference is in the way they are used.

Another difference is that in a normal transformer there will be capacitance between the 2 windings, between the windings and core, between the core and shell, etc.

These capacitances bring in high FREQUENCY NOISE from outside, which will be transmitted in the secondary circuit. So [in an isolation transformer] WIRES are connected between each component, (not DIRECT contact, but with insulation PRESENT). This permits a leakage current and eliminates unnecessary capacitance.

Actually an isolation transformer may be physically the same as a Step up/Step Down transformer. The main difference is in the way they are used.

Another difference is that in a normal transformer there will be capacitance between the 2 windings, between the windings and core, between the core and shell, etc.

These capacitances bring in high frequency noise from outside, which will be transmitted in the secondary circuit. So [in an isolation transformer] wires are connected between each component, (not direct contact, but with insulation present). This permits a leakage current and eliminates unnecessary capacitance.