ISO stands for International/Industrial Standards organization. It has two main purposes:
The Standard for Digital Cameras "film speed." Higher ISO meant less light was needed, but quality suffered.
ISO6990 is a the standard for disks. ISOs can be downloaded and burned to make the disk. Ex. these Kubuntu ISOs can be downloaded and using software like Nero, nTI or CD Burner XP Pro one could burn a Kubuntu install/Live CD. This can be done with Windows too but it's illegal, so the use of ISO is questionable. Also the *.iso "image files" [Image file is a copy of CD] can be mounted as if u had the CD there, this is a great way to defeat when games ask to put the CD in. Computer CDs and DVD can be copied to ISO from the originals with CD burning software. Also users can burn the stuff right to ISO [ex If they wish to cancel they can and delete the ISO opposed to wrecking a CD/DVD]
For PSP, UMDs can be copied to ISO and launched via Devhook or OE. These files contain the same data as the UMD so the game can be played. There are sites to download ISOs but thats is illegal and most hackers only condone backups of your own games. You use use this (Note: Clicking this link will upload the file) to backup your games to your PSPs memory stick.
Archive Managers wont open them up to view the files to preview, etc.
THIS UPDATE: Made for This Thread on PSPhomebrew.net to better add understanding of CSO/ISO, also CSO will now redirect here! Unknown if CSO is only for PSP ISO or any ISO image…
Since ISO are virtual disks, then of course one may burn a CD from the ISO.
Guide on Ubuntu site (Free ISO burning software here too!. Of course Linux includes free software too!
Also Nero may be used.