The ISO name is taken from ISO 9660, used with CD ROM media but it contain a UDF(ISO/IEC 13346) file system ( used for DVDs and Blu-ray Discs).
The full form of ISO is International Organisation for Standardization.
The file which doesn’t contain ISO 9660 but have UDF which comes with. img extension is also used in some cases like Microsoft Dreamspark. An ISO file contains optical disc file system and contains elements that would be written in optical disc.