ok i'll try and explain things as best as i can with my limited knowledge and experience of such things and i'm sure ztrucker will correct any mistakes or misunderstandings i may have or make.
an iso is a bootable image (container) of a cd/dvd, and is used just so you can burn the files to a cd/dvd easily, the contents of the cd/dvd (iso image.) can be wim files or esd files.
an esd file is a container that holds the compressed wim file image.
a wim file is just a compressed image of the hard drive made using windows imaging file system.
more info on iso :- https://en.wikipedia.org/wiki/ISO_image
more info on wim :- https://en.wikipedia.org/wiki/Windows_Imaging_Format
can't find info on esd but from my understanding it is used to transfer wim files instead of just transfering the original wim file because it uses less data to transfer the same information contained in the original wim file.
so you can think of it like this the hard drive is stored in a wim file.
the wim file is then stored in a container called esd file to save space,
the wim file or esd file (holding the wim file) is stored in a container called iso file.
now all 3 have exactly the same information about the imaged hard drive just stored in slightly different ways.
no expert on dism so think i'm correct in saying
you can change the contents (add, remove data/files) of the wim file only when it is in a wim format using dism.
you can read and use the info stored in the wim file whether it is in a wim file format, esd file format or iso file format to make repairs or changes to the os and hard drive using dism.
hope that clears things up a little and i'm sure ztrucker will answer any questions i have not answered and/or offer a better explaination and correct any mistakes i may have made. 
