As with most nutrients, iron is absorbed in the intestines. There are two different types of iron – heme, which is primarily found in animal based foods and non-heme, which is mainly found in plant based foods.
Non-heme iron in particular is very difficult to digest and absorb, so it is important that it is paired with vitamin C in order to increase absorption, both when consumed in food and in the form of supplements.
When iron and vitamin C are consumed simultaneously, it forms a chelate which is absorbed much more effectively by the digestive system.
While vitamin C increases the absorption of iron, there are also a number of compounds that can inhibit the absorption such as tannins (found in tea and wine) and phytic acid (the coating on foods like grains and beans).