Optical discs are so “yesterday”
ISO and DMG files can replace optical discs, even if you have an optical drive on your computer.
Netbooks and MacBook Air portable computers do not have built-in DVD/CD drives. How do you use a DVD or a CD with them? You can connect an external USB optical disc player to them. These USB drives are reasonably inexpensive. You can also connect to a shared drive via a network connection. Or you can save the optical disc as an image file and then mount the image file as a drive on the target computer.
Mac OS X
In the Mac world it is common to download a DMG file (AKA an Apple Disk Image) to install an application. Below is a picture of Finder showing the Burning Monkey Solitaire DMG file I downloaded.

Once the file is on your Mac, you mount the disc image by double clicking on it and a new drive appears on your Mac. The picture below shows the mounted Burning Monkey Solitaire DMG file. It appears as a device below Macintosh HD in the Finder window left side panel. The right side panel shows the DMG’s contents, just as if an optical disc were in the DVD drive.

The OS X operating system has tools in the Disk Utility for creating and editing your own DMG files. I even found instructions on the web for how to use the Mac Disk Utility App to make ISO files.
Windows
ISO images are more generic than MAC DMG images as they can be used on Windows, Linux and Mac computers. There are many utilities, free and commercial, that can create an ISO file from an optical disc. DVD–Ranger’s ISOBuddy is a free Windows program you can use. Nero Multimedia Suite 10 and Roxio Creator 2010 are commercial applications that can also create ISO files.
Windows does not let you mount ISO files by double-clicking on them as the Mac OS X Finder does with DMG files. But there are free third-party virtual DVD/CD drives that let you do something similar.
I use the free SlySoft Virtual CloneDrive to do this. A new drive appears on your computer in Windows Explorer once Virtual CloneDrive is installed. The picture below shows it as BD-ROM Drive (G:).

You right click on the drive to get to its context menu, pictured below. You then either Mount… an ISO file to explore the files embedded within it or you Unmount a mounted ISO file. Once an ISO file is mounted, the BD-ROM Drive (G:) functions like any other optical drive reader. You can run files on it or copy them. When you are done with the ISO file, you Unmount it.

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