An ISO file is a complete "disc image" of the game's original DVD. It is typically used for preservation, emulation, or playing via hard drive on modified hardware.
For systems like the Xbox 360, "Region Free" ISOs are highly sought after for use with RGH (Reset Glitch Hack) or JTAG consoles, as they can be easily loaded through tools like XeXMenu or Aurora . How to Use the ISO Rango [Region Free][ISO]
Move the extracted folder to your console's internal or external hard drive via USB or FTP. An ISO file is a complete "disc image"
Use a tool like Xbox Image Browser to extract the game files from the ISO. Rango [Region Free][ISO]