You can think of the playstation BIOS as a very simple operating system for the playstation. Emulators simulate the hardware of the playstation, and the BIOS interacts with this 'hardware' and with the game. Emulators may include BIOS simulation, but the official BIOS is likely to increase compatibility. It is also illegal for you to own one . (I'm going to go out on a limb here and say that even if you live in a country where extracting the BIOS from a playstation you own is legal, you lack the necessary skills to do that, and in fact got yours from an illegal site)

It has absolutely nothing to do with .iso or .bin disk images, which are practically the same thing and are easily convertible.