In the context of gaming and PlayStation, a PSX ISO file typically contains a copy of a PlayStation game. These files are often used for backing up games or for playing them on emulators or through certain types of software that can mount or read ISO files as if they were the original discs.
Using standard Linux tools:
Technically, an "ISO" is a sector-by-sector copy of an optical disc. However, PlayStation discs were unique because they often contained multiple "tracks"—data for the game and separate Red Book audio tracks for music. psxiso