ROM
A ROM (ISO for disc-based systems) is a copy of the read-only memory chip implanted in a video game cartridge, a computer's firmware or from the main board of an arcade system. It is the entire source code of a game, copied from the chip to a PC through "dumping". They are considered illegal, as they are distributed without payment or permission to their originating companies, however some ROMs have been given the all clear by their original authors and can be downloaded freely (Examples include "Alien Arena", "Gridlee", "Robby Roto" and "Teeter Torture" for MAME). Like most of the Internet, MFGG (both site and forums) prohibits posting of or otherwise giving links to ROMs. However, discussion about them is allowed provided that no links or files are given.
ROM hacks are allowed to be posted if distributed as an IPS patch (or similar), as that only contains changes that need to be made to a ROM, not the code itself. Also allowed are resources like ripped graphics and sounds. Emulators can also posted or links given to them, as they are completely reverse-engineered. However, if the emulator requires a BIOS, the BIOS may not be posted as it counts as a ROM itself.
Emulation is important for fangamers; resources such as graphics and sounds, and other things like the engine physics and features are the basis of many fangames. However, this adds to the "gray area" associated with fangames and other fan works.
It should also be noted that many big video game companies use emulation for their own purposes as well. The Wii for example, uses emulation to run titles from it's Virtual Console lineup. Home-made emulators have also been benificial to these companies, such as PocketNES (A NES emulator for the GBA), which has been said to may have inspired Nintendo to release NES classics on e-Reader cards and through the Classic NES series.