In common use, an "ISO" is a file that contains the complete image of a disc. Such files are often used when transferring CD-ROM images over the Internet. Depending on who you're talking to, "ISO" may refer to all disc image files or only certain kinds.
Going by the more restrictive definition, an "ISO" is created by copying an entire disc, from sector 0 to the end, into a file. Because the image file contains "cooked" 2048-byte sectors and nothing else, it isn't possible to store anything but a single data track in this fashion. Audio tracks, mixed-mode discs, CD+G, multisession, and other fancy formats can't be represented.