Like others my knowledge is old and sketchy, but as I remember it in the original ISA bus IRQs were edge sensitive rather than level sensitive, which meant that sharing IRQs was often disastrous. The most common scenario I encountered was with COM1/COM3 sharing the same standard IRQ, as did COM2/COM4. Sure, you could use non-standard IRQs but there weren't many to choose from. Essentially it meant that you couldn't reliably operate many standard serial ports simultaneously.
IRQs and address spaces were selected with DIP switches and/or handbag jumpers. I never understood what the fuss was about these, what you set was what you got, but that didn't stop the introduction of ISA Plug and Play, which at the time was frequently called "Plug and Pray" as its automated allocation was often far from favourable, and overriding it wasn't always possible.
More modern busses like the PCI bus use level sensitive IRQs allowing interrupt sharing, as well as offering a more robust plug and play than ISA PnP.
ISA PnP wasn't a bad idea, per say, it's just the implementation was often lacking. You see, initially it didn't *require* a special "ISA PnP Motherboard" or anything to work; it was essentially a software implementation first! Basically, before BIOS integrated PnP, it went like this:
You bought your ISA PnP card and installed it into your generic AT clone. There were no jumpers on the board to set IRQs and DMA, so you loaded up some software that came on a disk with the card. This software then scanned your system, checking each ISA address, IRQ line, DMA channel, etc. (not unlike a diagnostic/system profiler application like MSD.exe).
Once it had an overview of the hardware in your system, it picked a free IRQ, DMA channel and appropriate address. The software then installed a device driver that would send this configuration to the card on boot (sometimes this information would actually be stored in NVRAM/Flash/EEPROM on the card itself, negating the need for a device driver) and told you to reboot.
The problem with this method is it relies on whomever wrote the software to do hardware detection. Quality varied widely from one manufacturer to the next. (NI had really good PnP software; 3Com, not so much.)
Eventually this problem was rectified when the PnP initialization was handled by the BIOS instead of individual hardware manufacturers. Unfortunately, it was too late to be particularly useful for ISA, as PCI was out and quickly gaining traction.