Overview:
A fine-grained plan describing the objectives, work assignments, and evaluation criteria for the iteration.

Purpose:

Communicate the objectives, task assignment, and evaluation criteria for a given iteration.

Main Description:

The task assignments for an iteration is a subset of all tasks on the Work Items List, therefore the iteration plan ideally references those work items.

Key Consideration:
Work items assigned to an iteration do not necessarily have the same priority. When selecting work items from the Work Items List, the iteration plan may end up having work items with different priorities (for example, you assign the remaining high priority work items, plus a few mid priority ones from the Work Items List). No matter what previous priorities the work items had, when assigned to an iteration the team has to make sure they are able to develop what has been assigned to the iteration, and deciding on what to develop first (or even develop things in parallel) on an iteration will vary from project to project, from iteration to iteration.