Unlike a standard ZIP or RAR archive, an ISO file is a of the low-level data on a disc.

: The name "ISO" is derived from the ISO 9660 standard, which governs how data is organized on optical discs. Common Uses for ISO Files

ISO files are primarily used to archive and distribute data that was traditionally stored on physical discs. How Do I Burn ISO Files? - Ask Leo!

: It preserves the original disc's metadata, permissions, and file system layout, which is why it is the standard for distributing large software packages like operating systems.