An ISO file (often called an ISO image), is an archive file that contains an identical copy (or image) of data found on an optical disc, like a CD or DVD. They are often used for backing up optical discs, or for distributing large file sets that are intended to burned to an optical disc.
The name ISO was taken from the name of the file system used by optical media, which is usually ISO 9660. You can think of an ISO image as a complete copy of everything stored on a physical optical disc like CD, DVD, or Blu-ray disc—including the file system itself. They are a sector-by-sector copy of the disc, and no compression is used. The idea behind ISO images is that you can archive an exact digital copy of a disc, and then later use that image to burn a new disc that’s in turn an exact copy of the original. Most operating systems (and many utilities) also allow you to mount an ISO image as a virtual disc, in which case all your apps treat it as if a real optical disc were inserted.