A file containing the exact copy of the contents of a CD or DVD in one easy download. The intended use is to burn the ISO to a CD/DVD as an image file (don't just burn a data CD where the ISO is just 'one of the files') and then run it. The exact process depends on your burning software. Alternatively, you can use something along the lines of Daemon Tools (freeware but contains optional adware) to 'mount' the ISO in a virtual CD/DVD drive without actually burning it to CD/DVD. You can then install it from the new drive listed in My Computer as you would any other software on a CD.
I recently downloaded Command and Conquer from fileplanet, it says read installation instruction, these are ISO files. But I can't find the installation instructions and I don't know what ISO files are or how to use them or how to properly install the game.