You install the Daemon Tools, and it makes a fake Mountable CD ROM on your system. You use CD Mastering Software like CDRWin or CloneCD to make an Image file on your HD, You "Insert" that image into the virtual CDROM and install and play the game from that drive.
It basically spoofs your machine into thinking it has an extra CDROM. You can make as many images as you have space, and just swap "Images" instead of actual CD's.
This one is free, as opposed to many commercial CDROM Emulators, and works just as well, if not better..