A disk image is a computer file containing the complete contents and structure of a data storage device.
The term has been generalized to cover any such file, whether taken from an actual physical storage device or not.
A common use of disk images is for remote distribution of software such as Linux distributions: installation CD/DVDs can be recorded as disk image files, transferred over the Internet, and the contents of the original disk(s) duplicated exactly by end users with their own CD/DVD drives. They are commonly used to distribute Live CDs.
Another common use is to provide virtual disk drive space to be used by SystemVirtualization. This can prevent the CD from getting burned or damaged. It can also reduce bulk when one wishes to carry the contents of the CD along with oneself: one can store disk images to a relatively lightweight and bootable storage device which has a higher storage capacity than that of a CD (i.e. a USB keydrive).
As is typical for disk images, in addition to the data files that are contained in the ISO image, it also contains all the filesystem metadata (Boot code, structures, and attributes). All of this information is contained in a single file. These properties make it an attractive alternative to physical data storage device for the distribution of software which requires this additional information as it is simple to retrieve over the Internet. It is commonly used fir the distribution of Linux and LiveCDs.
ISO images have the MIME type application/x-iso-image
.bin files (or .RAW files) are images extracted in pure RAW format. That is 2352 bytes sectors, the full CD sector content: user data, sector header, error correction codes (ECC) and error detection codes (EDC). Once again, each sector is converted to digital data in the .BIN file, but more stuff is copied and the resulting file will be bigger. The .BIN file should be 251,000 x 2352 = 590,352,000 bytes big. This process will copy ANYTHING on the disc, so it is useful for exotic discs (multiple tracks, mixed track type Audio+Data or Data+Audio) and for non-PC CDs (PSX, VCD, MAC).
A DMG file (disk image) is a popular format on Mac OS X. It is widely used for software distribution means, and is actually the raw image of a HFS filesystem, that's why in Mac OS X it is mounted as a drive.
DMG disk images have the MIME type application/x-apple-diskimage
To create a .dmg image from a HFS formatted CD or hard drive partition: dd if="your input file" of=image.dmg
To mount a .dmg disk image to a directory, you need to install the hfsplus package, then mount it with mount -o loop -t hfs image.dmg /mnt/somewhere
.img is the filename extension usually use for the disk image of floppy disks, and sometimes, hard disks. First popularized by DOS-based software HD-Copy DiskDupe and now WinRaWrite, is a handy way to archive a floppy disk completely, including bootable ones. In fact there is no "format" in it, just a raw dump of the content of the disk.
Some newer software like WinImage supports zipped version of the format and the extension is .imz.
.nrg is a Nero disk image.
You can mount it to a directory using: mount -o loop,offset=307200 imagename.nrg /mount-point