So... what is Isz?

Solution 1:

Isz Chalices are items that unlock levels within the Isz Chalice Dungeons.

From the item description of the Isz Root Chalice:

According to the Choir, the land of Isz lies in contact with the cosmos, which allowed the Great Ones to function on transcendental planes of thought.

This suggests that it is an entirely different location, separate from the "Labyrinth" beneath Yharnam.

After playing the game, I have realised that the whole premise of the game is the world is structured over several planes of existence. "Isz", is one such plane, host to greater beings, and the true depiction of things. The "Land of Isz", technically is always there, just not visible, because your mind is just that closed off to the possibilities that exist within the plane, that you simply can't see them.