An .iso (or .bin) is a software image of a real physical CD, complete with a cd's file system (not a OS's interperitation of a cd) in other words an iso is a:
1) a cd 'image'
2)a cd 'doppleganger'
3)a cd 'clone'
4)a cd 'double'
5)a cd 'replica'
6)a cd 'body snatcher'
7) a 'virtual' cd
In other words its a software *wrapper* of files that for all purposes (other than being physical..ie>something you can see and touch) IS a cd...and not just a bunch of files like something on you HDD.
To 'play' an iso you need a 'virtual' cd drive (like daemon ,nero image drive, clonecd, alcohol etc.) These are software 'replica' cd drives (aka 'virtual' drives).
ISOBuster will read and EXTRACT data from an .iso (VERY USEFUL) but will not play an .iso...so will winRAR (but more limited...but still a great app).
You can also *obviously' BURN an iso direct to cd (VERY VERY USEFUL).