From The Aquarium Wiki
Iodine (I) is a chemical.
Iodine naturally occurs in the environment chiefly as dissolved iodide in seawater, although it is also found in some minerals and soils.
Iodine is an essential trace element of life; its only known roles in biology are as constituents of the thyroid.
However it is believed to be essential for Coral and invertebrates (freshwater or marine) to aid them in forming and molding their shell.
Iodine is often use in the aquarium hobby in its Iodide state (iodine in its ion state).
Normally there is no need to add additional iodine to a freshwater aquarium as food usually provides enough trace amounts. But some aquarists keeping freshwater invertebrates add a drop of iodine per 40L (10 US gallons) to the tanks to ensure there is sufficient. Some add a Health food shop Kelp tablet to a 100L tank once a week.
Commerical marine salt mixes are made with trace elements found in the sea so iodine is already added. However, iodine is removed by Protein Skimmers.
Potassium iodide is often used by reef aquarists. Typically 25g of potassium iodide is dissolved in one half liter of pure water, then 0.5 ml of this solution per 95L (25 US gallons) of aquarium water is added every two weeks.