An ISO image is optical disc image that contains everything that would be written to an optical disc, or disc sector by disc sector. Software distributed on bootable discs is often available for download in ISO image format, e.g. Windows 10 image file you download from Microsoft website.
Wrapping up a folder in ISO format is really widely used in many situations but does have some advantages. You can use it as an archive format that can be stored separately and mounted on any operating system later on when needed.
Since there is nothing available out of the box to convert a folder into an ISO image format, we will need something from 3rd parties.
Folder2Iso is a portable free Windows tool and Linux application that creates an ISO from any folder. The root folder can contain sub-folders. It works for all Windows versions, both 32 and 64-bit platforms are supported.
The GUI is pretty self-explanatory. Click Select Folder to pick the folder you want to convert, and click Select Output to choose where you want to save the ISO file and what the filename will be. Then write an ISO label and click Generate ISO button.
A few moments later, you get yourself a nicely ISO image file that contains the entire folder you selected.