Where is the data inside a disk image stored when it is mounted in a virtual CD-ROM?

I wanted to know what type of memory is consumed when a disk image is mounted in a virtual CD-ROM (for example, when we mount a .ISO file using Daemon Tools) and where is the data inside the disk image stored on a computer when the image is mounted. Also if an image is mounted, will it affect the computer's performance?

Solution 1:

It doesn't move the ISO files anywhere. It stays on the hard drive (or wherever it's stored) and when mounted to a virtual disc drive, it just de-abstracts the ISO container.

When the PC reads the first block of data from the virtual disc drive, the ISO mounting application redirects that read request to the appropriate block of data within the ISO file. This process continues for each additional read request.