It contains the default MS-DOS device drivers[1] (hardware interfacing routines) and the DOS initialization program.
In the PC bootup sequence, the first sector of the boot disk is loaded into memory and executed.
IO.SYS then: The IO.SYS filename was also used by Disk Control Program [de] (DCP), an MS-DOS derivative by the former East-German VEB Robotron.
Likewise, the IO.SYS of the older system is named IO.DOS for as long as Windows 9x is active.
DR-DOS 7.06 (only this version) also follows this scheme and the IO.SYS filename in order to become bootable via MS-DOS boot sectors.