An isotropic manifold $M$ is one for which the isometry group $G$ acts transitively on $M$, and for which the isotropy group $G_p$ acts transitively on spheres in $T_p M$ (for some and hence all $p\in M$).
While the curvature at any two points is "the same" in the sense that we may write the Riemann tensor $R$ as $R(p)=g^*R(q)$ for any $p,q\in M$, this doesn't fully constrain the sectional curvature, since different planes in $T_pM$ may have different sectional curvatures. The isotropy condition may not either, since while $G_p$ acts transitively on lines in $T_pM$, it won't necessarily act transitively on planes in $T_pM$.
As an example, consider the complex projective space $\mathbb{CP}(n)$ with the Fubini-Study metric. The isometry group is the projective unitary group $G=PU(n+1)=U(n+1)/U(1)$ (since the FS metric is $U(n+1)$ invariant by definition and the center $U(1)$ is the kernel of the action on $\mathbb{CP}(n)$); one can verify this action is transitive. Fixing the line $l=\{(z,0,\dots,0)\in\mathbb{C}^{n+1},z\in\mathbb{C}\}$, one can show that the isotropy group is isomorphic to $U(n)$, and thus the isotropy representation $G_p\to GL(T_pM)$ is just the defining representation of $U(n)$ (though we can forget the complex structure and consider it an action on $\mathbb{R}^{2n}$). This representation is transitive on lines, but not on planes for $n\ge 2$. The second claim is evident since the sectional curvature is invariant under this representation, but is not constant on the space of plains $Gr(2,T_pM)$ (en explicit formula is given here).
As for why this is, it seems related to the fact that it is "harder" for the isotropy representation to act transitively on $Gr(2,T_pM)$ than on $Gr(1,T_pM)$, by dimension counting if nothing else. It will if $G_p\cong SO(\dim M,\mathbb{R})$, but in general $G_p$ is only a subgroup of the orthogonal group.
I'm not familiar with the classification of istropic spaces, but it seems that those with constant sectional curvature form only a fraction of the full picture. For instance, if we restrict to the compact, complete, and simply connected case, the only isotropic spaces of constant sectional curvature are round $S^n$, while the other classes $\mathbb{CP}(n)$, $\mathbb{HP}(n)$, and $\mathbb{OP}(2)$ have no constant curvature metrics.