To understand ISO you need to understand the old boot process.
Older BIOS (pre-EFI) had hard-coded simple boot loaders that loaded the first sector off of a hard drive or other media. These bootstrap loaders would run and they had more smarts to load the Windows loader, which in turn loaded Windows. These loaders, if they knew anything about a file system, it would have been FAT.
So disks had MBR formatting on the partition table and CDs and DVDs had ISO formatting.
Nowadays, EFI boot proms understand NTFS and can have much more elaborate handling of file systems.
So, in a nutshell, an ISO image is a CD/DVD drive format that usually is able to run from BIOS.
Nowadays, it's also another type of file archive format that can be mounted as a file system (ie, get's its own drive letter).
Often software vendors use it to install large applications. Sometimes you even see Windows and Apple installs on the same image.
Flash drives (and all removable media) can not have partitions (unless you resort to special stuff). So they require something like FAT32 boot loading usually. You can't mount and eject file systems. At least not in Windows.
YUMI is a FAT32 application with a syslinux boot loader with enough smarts to display a menu and run some simple scripts. It can load certain types of file and supports ISO and CASPER file systems and maybe a few others.
Typically one could use it to boot a Linux LiveCD, a Kaspersky rescue disk, or any other number of recovery utilities when your normal boot doesn't work.
I use it to store all my recovery utilities on a single device. Run the application that makes an ISO file and you can use YUMI to boot that from a flash drive. I also boot to Linux with it.
There is no practical limit to the number of applications - most ISOs are under 4 GB so you could easily fit 10 or 20 on a 64 GB flash drive. So I keep older versions along with newer ones.
And slow flash is hundreds of times faster than fast CDs and DVDs.
Everyone should use YUMI (or one of the equivalents).