It's a bit more complex. Beyond using a bespoke ~1GB GD-ROM format that normal optical drives can't read, the discs did AFAIK have copy protection of the "wobbly track" variety. So even if you have a GD-Recordable drive and media, you couldn't just copy the games. (Although if you have a GD-R drive you almost certainly had the dev tools to run unprotected games anyway).
Unfortunately they wanted a way to add Dreamcast content to music CDs ("MIL-CD"), which led to a massive holes in the security that meant it would happily boot off CD-Rs. I guess they didn't want to tie record companies to Sega's own duplicators so the CDs don't have any direct copy protection. Instead CD programs are "encrypted" (unlike GD-ROM games) and the disc drive turned off after initial load. Naturally the encryption / scrambling was figured out, and people figured out how to turn the drive back on[1]. Thus fun with piracy and homebrew. Late in the production run they removed the MIL-CD stuff entirely, although the vast majority of systems out there would've been built by then.
(Sorry if I've got any details wrong).
[1] Plus a bonus that the boot sector could contain unchecked extra code that made "self booting" pirate games possible.
So if you had an ISO of a dreamcast game, it is possible to burn it to a CD-R and play it on an unmodified console (when it was first cracked it had to be a boot disc with a swap). The exploit was some sort of a software hijacking of the console's ability to play MIL-CDs which were used for interactive music discs in Japan.
Copying itself from the source discs (GD-ROMs that had their grooves packed closer together than a traditional CD for extra capacity), from what I can remember reading, was primary done via a dreamcast console (perhaps initially it was done via a development kit) and a serial cable or ethernet adapter.
I think over the years more means of doing the GD-ROM copy became available, like firmware overwrites of certain PC drives.
Games that were bigger than a CD's capacity had to have their textures downsampled and recompressed though. I only point this out as anyone interested in playing DC games they don't have a GD-ROM copy of has a much better option in the form of GDEmu or Terraonion MODE.
I remember the old way of ripping original Xbox games was to use a modded Xbox that would serve the game disc over FTP. You'd connect to the Xbox and copy the disc contents off of it. You could then burn them to a blank DVD and your modded Xbox would happily play the xex executable. You could have quite the library of games by borrowing from friends or renting from Blockbuster. The next upgrade was to drop in a larger HDD so you could play games off the HDD instead. Games loaded so fast and could load even faster with a high speed ribbon cable.
Now you can pull almost every retail Xbox game off of internet archive and throw nearly all of them on to a massive multi TB HDD.
Unfortunately they wanted a way to add Dreamcast content to music CDs ("MIL-CD"), which led to a massive holes in the security that meant it would happily boot off CD-Rs. I guess they didn't want to tie record companies to Sega's own duplicators so the CDs don't have any direct copy protection. Instead CD programs are "encrypted" (unlike GD-ROM games) and the disc drive turned off after initial load. Naturally the encryption / scrambling was figured out, and people figured out how to turn the drive back on[1]. Thus fun with piracy and homebrew. Late in the production run they removed the MIL-CD stuff entirely, although the vast majority of systems out there would've been built by then.
(Sorry if I've got any details wrong).
[1] Plus a bonus that the boot sector could contain unchecked extra code that made "self booting" pirate games possible.