ISO is a disk image defined by the International Organization for Standardization.
The name ISO is taken from the ISO 9660 file system used with CD-ROM media, but an ISO image can also contain UDF file system because UDF is backward-compatible with ISO 9660.
An ISO file contains the image of a disk, meaning that it contains every file and folder that the disk had. An ISO is a byte-for-byte copy of the low-level data actually stored on a disk (raw data).
There are three ways to deal with ISO file:
Burn the iso file to a disk
Iso files are frequently used to distribute CD or DVD images. Using a CD or DVD burning program like ImgBurn you can then write that iso disk image to an actual disk. The disk you burn is completely the same as the original disk.
Mount the iso file as if it were a disk
There are several utilities out there that will mount an iso file as if it were a disk driver.
Read the files in the iso file directly
ISO file can also be treated as a 'zip' or 'rar' file, only without the compression. Some of the popular archiving utilities, including WinRAR and 7-Zip can also read and extract the contents of iso files.